Iron ore production is imminent for Venture

Venture Minerals is well on track towards becoming Australia’s next iron ore producer this quarter with commissioning of the wet screening plant now underway.

This is well-timed given that the decision to proceed with developing the Riley Mine was based on an iron ore price of US$90 per tonne in the August 2019 feasibility study while iron ore is currently commanding a price of US$210/t.

What this means is that the already attractive economics such as an internal rate of return (IRR) of 303 per cent and post-tax net present value (NPV) of $27m along with post tax cash generation of $31m – both measures of a project’s profitability – are now looking decidedly conservative.

Venture Minerals (ASX:VMS) says the equipment commissioning phase has started with electrical installation and piping nearing completion while the power station is now operational.

“Achieving this milestone of the installation schedule for the plant keeps the first iron ore shipment on track for this quarter,” managing director Andrew Radonjic said.

“The recent record iron ore price makes it a perfect time for the company to transform from explorer to producer.”

The company adds that the outlook for iron remains strong for the rest of the calendar year given the continued demand from China and ongoing supply concerns from Brazil.

Riley iron ore mine

As commissioning continues, previously mined ore will be put through the wet screening plant as part of the process of ramping up towards steady state production to meet the target of first ore shipment this quarter.

Venture is also preparing for full operational start-up and plans to restart mining activities this week.

Riley has immediately accessible ore reserves of 1.6Mt at 57 per cent iron with low impurities.

Operating costs are expected to be low as it is a direct shipping ore deposit that requires minimal processing while strip ratios are essentially zero, meaning that there is little or no waste material to remove.

This article was developed in collaboration with Venture Minerals, 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.