Iron ore production a big step closer for Strike Resources
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Special Report: Iron ore up and comer Strike Resources (ASX:SRK) has made “significant progress” on finalising a Mining Agreement with Traditional Owner representatives – a major step towards first production in early 2021.
Strike is currently fast-tracking development of the low cost, high return Paulsens East project to take advantage of strong iron ore prices.
The pending Native Title Agreement is essential for Strike to get its all-important mining licence.
A formal Mining Agreement document has now been drafted by representatives of Strike and the Puutu Kunti Kurrama and Pinikura People (PKKP) (the PKKP Aboriginal Corporation), for consideration at a PKKP Community Authorisation Meeting scheduled for 14 August.
If approved, the company and PKKP Aboriginal Corporation will formally execute the Mining Agreement, together with a State Deed for Grant of Mining Tenement with the State of Western Australia and the Minister for Mines and Petroleum.
“I would like to thank the representatives of the PKKP for their efforts in settling the terms of the agreement, which will now be considered by the wider PKKP community members,” Strike managing director William Johnson says.
“The settled terms of the draft Mining Agreement, if approved by the community members in August, will provide for significant benefits for the PKKP over the forecast life of mine and will allow Strike to continue to fast track development of the Project to take maximum advantage of current high iron ore prices.”
The economics of the high grade, low risk DSO Paulsens East project – which will cost just $8.2m to build — are very good.
Strike’s recently completed Revised Scoping Study outlines plans to produce 1.5 Million tonnes per annum of mainly 61 per cent Fe lump Direct Shipping Ore (DSO) product, for an initial mine life of four years.
The company forecasts net profit of between $82 million and $236 million — with a ‘base case’ of $150 million — over this initial four-year mine life.
That initial $8m capex could be paid back in just over three months.
Breakeven pricing for the first two years of production is forecast to be approximatly US$65/t.
This adds additional confidence to project economics considering recent strong iron ore pricing above $US105/t — versus US$85/tonne assumed in the Scoping Study.
And there’s plenty of upside here. This economic model, for example, does not account for any mining of iron ore from a recently discovered potential 1.6-kilometre mineralisation extension.
This story was developed in collaboration with Strike Resources, 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.