Special Report: Paulsens East is shaping up to be much bigger than Strike Resources initially thought.

Strike Resources Limited (ASX:SRK) has identified high-grade mineralisation just 1.6km from its Paulsens East iron ore deposit in Western Australia’s Pilbara region.

This new mineralisation target at  Paulsens East is set to be drilled early next year after the company flagged a potentially significant upgrade to project resources could extend the project’s four-year-plus mine life.

The target includes an historical drill hit grading up to 60.8 per cent iron ore and a co-incident surface sample grading up to 63.55 per cent.

And no drilling exists over the untested 1.6km strike between the existing resource and these results.

Paulsens East is a direct shipping ore (DSO) project about 233km southeast of the Pilbara town of Onslow.

DSO refers to minerals that require only minimal processing such as crushing before they are exported, which keeps costs low.

The Western Australian company’s high-grade iron ore project features 9.6 million tonnes of high-grade hematite conglomerate grading 61.1 per cent iron, 6 per cent silicon dioxide, 3.6 per cent aluminium oxide and 0.08 per cent phosphorus.

Paulsens East is a scoping study-level project, modelled as a four-year 6-million-tonne shallow operation that could further extend its mine life by going deeper to grab another 3 million tonnes of resources.

The project is valued at between $81m and $238m, is near good roads infrastructure and has access to new marine facilities at Beadon Creek.

Strike can access the port under intended export agreements with Onslow Marine Supply Base (OMSB) and Agility Project Logistics.

West Perth-based Strike expects its latest mineralisation find near Paulsens East could allow it to increase the size of the exploration project’s defined resource.

Managing director William Johnson noted an upgrade to resources could allow the company to further extend mine life at the project.

“The potential for a significant extension of high-grade iron ore mineralisation along strike offers opportunity to potentially extend the mine life even further, which could enhance the project value considerably,” he said.

“Strike is very encouraged by this exploration potential and plans to drill this target early in the new year.”

Ticking the boxes

The company has already started an approvals process for the project and published its scoping study for Paulsens East last week.

The study followed a finding in October 2019 that Paulsens East ore could produce a high-grade premium “lump” product.

The product had low levels of harmful minerals such as sulphur and suffered little degradation during transport.

Work is now starting on a project feasibility study and the company is preparing to conduct field drilling early next year to test the new mineralisation target.

The company is planning an accelerated development schedule for the project, with first production targeted for third quarter next year.

Strike has estimated it would need $12m pre-production costs to get the project going and could return the investment within four months of a production start.

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This story was developed in collaboration with Strike Resources Limited, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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