ASX-listed Venture Minerals remains on course to make the first iron ore shipment from its revitalised Riley iron ore mine in Tasmania during the current quarter. The Perth-based company says commissioning of Riley’s key wet screening plant is expected to kick off within a couple of weeks as various stages of the construction phase near completion.
Venture briefly mined Riley seven years ago before falling iron ore prices prompted it to shut up shop and put the project on care and maintenance.
The iron ore markets have changed dramatically since then.
Venture’s timing in taking Riley out of mothballs appears impeccable with the benchmark iron ore price for 62 per cent iron having more than doubled in the past year to record highs of around $US180 per tonne.
Supply concerns are persisting in one of the world’s largest iron ore producing markets, Brazil as it threatens to overtake the US as the worst pandemic-affected country across the globe
Continuing strong steel demand stemming from voracious Chinese Government infrastructure construction also supports the iron ore price outlook, according to Venture.
Despite the company bringing the Riley mining, beneficiation and haulage operation on stream with a relatively short estimated initial mine life of just two years, the iron ore price’s giddy heights still provide for a solid set of numbers at the project.
Venture has immediate access to near-surface probable ore reserves at Riley of 1.6 million tonnes at a grade averaging 57 per cent iron – and 61 per cent calcined.
Riley’s financial projections in the pre-feasibility study tabled by Venture less than two years ago were predicated on a benchmark iron ore price of only US$90.35 per tonne.
According to the PFS, the two-year mining, crushing and screening undertaking at Riley is tipped to generate $172.82 million in gross revenue and $37.64 million in EBITDA for a cash surplus of $30.67 million, assuming the US$90 per tonne iron ore price.
Cash operating costs in the August 2019 PFS have been forecast to average $56.09 per tonne free on board and $85.12 per tonne when including shipping costs.
An impressive rate of return after tax of 303 per cent has been calculated in the old PFS, no doubt helped by a staggeringly low CAPEX of just $6.7 million.
The wet screening plant speaks for $3.08 million of the CAPEX outlay.
Venture says it recently executed agreements with Launceston-based Shaw Contracting to carry out the mining and processing and other Tasmanian businesses for the supply of fuel to the mine site and hire of the power station.
The Riley product will be trucked about 120km via sealed road to the Port of Burnie for export.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
