Full steam ahead for DSO at Strike’s Peruvian project

Special Report: Strike Resources has moved to capitalise on the iron ore price, progressing towards direct shipping ore (DSO) production at its Apurimac project in Peru.

Strike (ASX:SRK), which has long held the highly prospective iron ore project, recently entered formal agreements with local miners for the mining of DSO lump from Apurimac.

Ore is currently being crushed and stockpiled and will be transported to port for shipping to customers abroad. First DSO shipment is planned for the second quarter of this year.

Quotes for the cost of trucking to port have also been received, and Strike said these indicated the company could generate a positive operating margin from the project.

Longer term, Strike is hoping for rail infrastructure to connect Apurimac to port. The company recently received a detailed update from the Peruvian government which outlined further plans around this project – see below for more details.

An in-principal port agreement for export has been struck with a port at Pisco, with a formal  agreement to be finalised.

The move to mobilise at Apurimac comes as Strike works towards production at the Paulsens East iron ore project in the Pilbara, from which first shipments are planned later this year.

Strike Managing Director William Johnson said it was an exciting time for the company, with Apurimac a critical component of its long-term plans.

The Company’s prime focus remains the advancement to production of the Paulsens East Iron Ore Project in the Pilbara, Western Australia,” he said.

“In parallel, Strike has determined to actively progress new initiatives in Peru, to capitalise on the recent sustained strength in the iron ore market together with the significant progress that has been made with the Peruvian Government’s initiative to build a railway linking Strike’s world-class Apurimac Iron Ore Project to the Port of San Juan de Marcona on the west coast of Peru.

“Whilst Paulsens East offers Strike the potential to generate significant cashflow in the near term, developing the Apurimac Project offers a larger scale and longer term opportunity for Strike and therefore positions Strike uniquely in the market with a pipeline of significant and attractive iron ore projects.”

Apurimac has an indicated and inferred mineral resource of 269 million tonnes of iron ore at 57.3% iron – 142Mt of which is in the indicated resource category.

Strike is planning to concurrently update prefeasibility studies completed on Apurimac in 2008 and 2010, with anticipated completion in Q2 this year. The company previously mined around 8000 tonnes of iron ore at the project as part of a pilot operation carried out in 2013.

Strike also owns a 90% stake in the Solaroz lithium project in Argentina.

Important rail update

The government of Peru has offered an update to Strike on the construction of a multi-user railway from the inland city of Andahuaylas to the Port of San Juan de Marcona, which would directly link Strike’s Apurimac Project to port and significantly improve its development prospects.

Subject to final approval of a feasibility study on the project, expected in Q3 of this year, and the completion of detailed engineering works, construction is proposed to begin on the project in 2024.

Should this take place, the railway would be ready for operation by 2028.

Peru’s Ministry of Transport and Communications (MOTC) said remaining works were nearing completion, with geological and geotechnical studies, surveying, photogrammetry, hydrological studies and community consultation now mostly complete.

“This mixed-service railway, for massive quantities of cargo as well as passengers, should become a reality as it would interconnect the South of Peru, bringing material economic benefits due to the many activities that would be created around the railroad,” Director of the General Directorate of Transport Infrastructure and Services at the MOTC, Carlos Saavedra, said.

“This would contribute to the development of the country, significantly improving the livelihood of the population.”

This article was developed in collaboration with Strike Resources, 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.