Vancouver – Macarthur Minerals (MMS-V) has issued the latest in a string of resource estimates from its Lake Giles iron ore project in Western Australia as it works towards a potential direct shipping operation.
The latest estimate covers the Snark and Drabble Downs direct shipping ore targets on the 1,050-sq.-km property, while overall the property hosts at least a dozen prospects at various stages of exploration.
The two hematite prospects are now estimated to host 8.6 million indicated tonnes grading 54.9% iron, with the vast majority of the resource hosted at Snark. For inferred goethite/hematite resources, Snark, Drabble and three other targets now have a combined resource of 16.4 million tonnes grading 55.3% iron, about 5.4 million of which is hosted at the two.
Macarthur notes that the update shows a 46% increase in the overall resource of the two targets, thanks to more than 400 reverse circulation holes drilled this year. Nearly 250 more RC holes are still waiting to be assayed, and were not included in the resource, while the company is targeting 100,000 metres of overall RC drilling in 2011.
The company’s share price dropped 25¢ or 15% to $1.40 on the news with 246,000 shares traded.
With the latest resource Macarthur will move ahead with a prefeasibility study on Snark, with baseline studies already well underway. The company, targeting a 2-million-tonne-per-year operation, expects to have the study out later this year.
The property, sitting about 450 km east-northeast of Perth, is accessible by a 115 km graded dirt road, while a rail line runs about roughly equal distant through the town of Menzies. The company’s property overlaps the Mt Manning nature reserve, but defined resources are outside the reserve boundaries. The area has previously been explored for nickel and gold, while Macarthur has been exploring there for iron ore since 2005.
Iron mineralization styles at Lake Giles include secondary pisolite mineralization, primary magnetite mineralization associated with unoxidized banded iron formation and ultramafic rocks, and goethite-hematite mineralization associated with oxidized banded iron formation. Mineralization runs along the strike of banded iron ridges, ranging from 1 to 16 metres thick, with lenses mostly steeply-dipping and running from surface to a depth of 50-55 metres.
The property also hosts the advanced-stage Moonshine magnetite deposit that was the subject of a scoping study earlier this year. The study outlined a project with an internal rate of return of 23% and an A$2.5 billion net present value based on a 10% discount rate and a 26-year mine life. Total project costs range from A$2.5 billion to A$2.9 billion, with a three-and-a-half to four year payback period, while operating costs are A$52.3 per tonne concentrate.
The study was based on Moonshine’s 710 million inferred tonnes grading 30.6% magnetite iron, while overall the Lake Giles project hosts 1.3 billion inferred tonnes grading 30.1% magnetite iron. The study looked at an output of 10 million tonnes per year of 68% magnetite concentrate.
The project would use a slurry pipeline to transport concentrate to rail, either to Karara, Menzies or Jaurdi, which provide different port options.
In February the company raised $50 million by issuing 13.9 million units at $3.60 each. Units held one share and one half-warrant, with full warrants exercisable at $4.50 for 24 months. The company also recently received preliminary approval to move to the TSX main board, and jointed the OTCQX International marketplace in June. The company has 44.7 million shares outstanding.
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