Macarthur Minerals advances Lake Giles iron project

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, 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 (RC) holes drilled this year. Nearly 250 more RC holes are waiting to be assayed, and were not included in the resource. The company is targeting 100,000 metres of RC drilling this year.

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 is targeting a 2-million-tonne-per-year operation, and expects to have the study out later this year.

Located 450 km northeast of Perth, the property is accessible by a 115-km graded dirt road, while a rail line runs a nearly equal distance through the town of Menzies. The company’s property overlaps the Mount 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 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 a 23% internal rate of return and 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 the Lake Giles project hosts 1.3 billion inferred tonnes grading 30.1% magnetite iron. The study looked at a 10-million-tonne output 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 joined the OTCQX International marketplace in June. 

The company has 44.7 million shares outstanding.