Shares in Fortescue Metals Group soared 25 per cent today to a new record high after the iron ore group revealed a resource estimate for part of its Pilbara Solomon project of more than one billion tonnes.
Shares in Fortescue Metals Group soared 25 per cent today to a new record high after the iron ore group revealed a resource estimate for part of its Pilbara Solomon project of more than one billion tonnes.
Investors rushed to FMG shares, pushing the stock to a record $64.99, up $13 or 24.9 per cent.
That saw FMG chief executive Andrew Forrest's stake in the group balloon by yet another $1 billion to $6.5 billion.
FMG shares gave back some ground closing 18.8 per cent higher, or $9.67, to $61.20..
The JORC compliant inferred resources estimate, which has an average grade of 56 per cent iron, covers the Serenity area, or the western one-third of the company's Solomon project.
The project is located about 125 kilometres west of its Cloud Break mine in the Chichester Ranges..
To date, Fortescue has uncovered a resource of about 2.4 billion tonnes at the Chichester Ranges.
In September FMG head of geology and exploration Eamon Hannon told WA Business News that the Solomon zone was the company's "sleeping giant" and estimated the group would deliver a resource estimate of one billion tonnes by the end of the year.
FMG's initial estimate represents one third of its total tenements in the Solomon area.
FMG executive director Graeme Rowley said today there was "no doubt" that the Solomon project could become bigger than its Chichester Ranges deposits.
Mr Rowley said further exploration was underway and expected to release further results before Christmas.
To develop Solomon FMG would need to construct a spur line from its 240km railway from Port Hedland to its Cloud Break mine. Mr Rowley said while it was still "early days" the company had the necessary approvals to develop a spur line.
Mr Rowley also said that the company anticipated generating enough cash flow from the sale of its iron ore, which is expected early next year, to finance its future development needs.
"It is a fantastic discovery," Mr Rowley said. "It's a major milestone."
A copy of FMG's statement is pasted below:
Fortescue Metals Group Ltd ("Fortescue") is pleased to announce an estimate of Inferred Resources of iron ore totalling in excess of 1 billion tonnes (Bt) for the Serenity area comprising the western one-third of its Solomon Project area (see appendix 1).
A total of 1,014 Bt averaging 56% Fe has been defined as an Inferred Resource in accordance with the JORC Code. Within this deposit Fortescue has defined 337 million tonnes (Mt) of channel iron deposit averaging 56.7%
Fe.
Fortescue is continuing to drill equally prospective targets in the eastern portion of the Solomon Project area and expects to announce additional resources in that area before Christmas. Serenity is located about 60 kilometres north-northwest of Tom Price in the Pilbara region of Western Australia.
This discovery is a result of a drilling programme by Fortescue aimed atproviding sufficient resource with its Chichester deposits to support its planned production expansion to 200 million tonnes per annum (mtpa).
This initial mineralisation comes from the Serenity area which represents one third of its total tenements in the Solomon area.
Metallurgical test work has commenced and preliminary results suggest that mineralisation is responding positively but further work is required to determine detailed process flow sheets, expected recoveries and product
characteristics. This work is ongoing.
The information in the report to which this statement is attached that relates to Mineral Resources is based on information compiled by Mr Stuart Robinson who is a Fellow of The Australasian Institute of Mining and Metallurgy and Mr Clayton Simpson who is a Member of the Australasian Institute of Mining and Metallurgy.
Both Mr Simpson and Mr Robinson are full time employees of Fortescue and provided geological interpretations for Mineral Resource calculations and compiled the exploration results. Mr Robinson and Mr Simpson have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Both Mr Simpson and Mr Robinson consent to the inclusion in this report of the matters based on his information in the form and context in which it appears.
SOLOMON AREA GEOLOGY
Outcropping geology in the region is the Dales Gorge, Whaleback shale and Joffre members of the Brockman Iron Formation which are known to host large Iron ore deposits within other regions of the Hamersley Ranges (bedded
iron deposits or BID's)Incised into this bedrock geology are large Channel systems, predominantly one to two Kilometres in width, and stretching for tens of Kilometres. During the Tertiary period weathering and erosion of the generally iron rich surrounding bedded material deposited iron rich sediments into these channels (termed Channel Iron Deposits or CID's), and this material has subsequently been buried and preserved. Through Fortescue's interpretation of drill hole results, the CID deposits can be subdivided into an upper 'hard ore CID' and a lower 'Ochreous CID', clay lenses are observed as semidiscreet bands often several metres thick and of a poddy nature although often traceable between drill holes.
Some of the material overlying the CID material is of younger age and has also been eroded from iron rich material. This clastic material is concentrated into horizons of elevated iron grade termed Detrital Iron Deposits (or DID's), which forms part of the sequence of overlying later Tertiary aged alluvials.
Exploration operations by Fortescue within the Solomon project region (RC drilling) has focussed on exploring these Valley systems and has discovered large tonnages of all of these three classic Hamersley Province Iron deposit types (DID, CID and BID). Often in certain areas the DID's will overly a thick sequence of CID material which in turn may be underlain by BID material.
