Junior iron ore miner CuFe Ltd has confirmed the presence of high grade hematite iron ore mineralisation at its Yarram iron ore project in the Northern Territory, bolstering the potential to expand its iron ore business.

CuFe (ASX:CUF) owns 50% of the Yarram project in the NT’s Batchelor region, drilling 314m in five holes in November and December last year.

Assays have proven successful, with a headline strike of 36m at 58.2% Fe from 15m in hole YARC2113, including 11m at 62.2% Fe from 23m, 7m at 61.8% Fe from 37m and 6m at 63.8% Fe from 45m.

Those grades are significant given the benchmark iron ore price is indexed on a 62% basis and grades at Australian mines are largely declining.

Other holes returned 9m at 59.8% Fe from 22m (YARC2118), 3m at 58.7% Fe from 41m (YARC2126) and 5m at 59.35% Fe from 66m (YARC2130).

Get on the drills

The drilling has confirmed historical results and provided a world of confidence ahead of a large scale program in the 2022 dry season.

A gravity survey which revealed a big density differential behind high grade hematite mineralisation and the surrounding dolomite/laterite has also highlighted the potential to confirm further historical intersections.

CUF says the high grade results from a 2014 drilling campaign ‘correlate well to the higher density areas identified in the current survey and are supportive of the perspective that some of the 2021 drill holes were located off the main ore body area.’

“It’s pleasing to validate the presence of high grade mineralisation at Yarram via our own drilling,” CUF executive director Mike Hancock said.

“While this campaign was small given known time constraints it has provided us with valuable insight to support our next drilling campaign.

“This knowledge has been further supplemented by the gravity work conducted, which has provided additional drill targets to those previously identified. We are excited to see what we turn up in our next drilling campaign, which we would expect to kick off in the current quarter.”

JWD on a high

It comes as high prices brighten the outlook for its JWD iron ore mine in WA’s Mid-West, where larger production volumes, strong prices and in the money hedging arrangements are set to deliver a boost over the coming quarters.

CUF offloaded two cargoes in the January quarter for Asia with an average price of US$140/wmt FOB totalling 90,000t, with the March shipment of 60,000t provisionally priced on the April forward price.

That may seem normal compared to an average March quarter price of US$141/t for 62% iron ore.

But it’s actually more impressive, given the Pilbara producers cop discounts to the benchmark for their lower grade blends and that the pricing is free on board, meaning with freight and taxes overseas the price would be higher overall.

The result highlights the high grade nature of the lump resource at JWD, with premiums for the product over fines rising from 20c per dry metric tonne unit for September to 31c/dmtu at the end of March.

CUF has 295,000t hedged for the period from April to December, including 140,000t of swaps averaged US$151/dmt and 155,000t of collars with an average floor price of US$123/t and ceiling of US$162/t.

The lump premium will be paid on top of that, with 75,000dmt of lump premium hedges entered at an average rate of US37c/dmtu.

On the operational side of things CuFe has boosted its haulage and processing capacity with an additional haulage contractor and the introduction of 60m road trains, as well as installing a larger crusher and sizing screen at the JWD mine.

CUF, which ended the March quarter with $9.32 million in the bank, expects costs to fall as mining operations ramp up to full production.



This article was developed in collaboration with CuFe LTD, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.