Lodestone Mines may IPO after bringing its SA iron ore mine online in 2022
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South Australian iron ore company Lodestone Mines is aiming to bring its Olary Flats project online in late 2022 and begin shipping its high-grade ore to customers in 2023.
The unlisted public limited company is part way through completing a high-level cost estimate for the project situated in South Australia’s vast Braemar magnetite ore province.
The Lodestone tenements holdings have a geological potential of more than 10 billion tonnes of magnetite bearing mineralisation.
“First ore is planned for 2023 and [we are] looking to load from ports in Adelaide,” Lodestone Mines director and chief operating officer, Robert Williamson, told Stockhead.
The company’s motto is to ‘start small and expand rapidly’, beginning with an initial run rate of 1.5 million tonnes per year, and to fund further production expansions from its cashflow.
“The current resources have the geological potential to maintain a 50 million-tonne per year production for 50 years,” he said.
The Olary Flats project is served by a railway from Olary in South Australia, that connects to several ports in South Australia, a distance of 300 to 400km depending on choice of port.
The company’s infrastructure arm Braemar Infrastructure is looking into further export options for the project.
They include a possible floating port in Spencer Gulf. Such a port would be capable of loading Capesize vessels up to 250,000 dead weight tonnes.
Lodestone Mines has already signed letters of intent with a number of potential offtake customers in Asia, the Middle East and North Africa (MENA).
“We are also in discussions with new offtake customers. We have letters of intent in Asia and MENA for up to 20 million tonnes,” said Williamson, a former Rio Tinto executive.
The letters of intent can convert into sales and purchase agreements as the project advances.
The company is close to completing feasibility studies for the project, and is already working to raise capital from existing shareholders and new investors for its construction phase.
Olary Flats has some of the highest grades of in-situ magnetite in the Braemar, and the project has a drilled JORC resource base of 1 billion tonnes.
The iron ore market is currently running very hot with spot prices trading at a nine-year high, as demand mostly from China outstrips available supply.
Cargoes of iron ore for delivery to Chinese ports are trading this week at $US168 per tonne ($215/tonne), according to Metal Bulletin.
In laboratory tests, the iron content of Olary Flats concentrate has reached 70 per cent iron, and concentrates production is planned around an iron content of 68 to 69.5 per cent.
Premium-grade West Australian haematite iron ore has an iron content of about 62 per cent.
Higher iron content ore is sought after and attracts a significant market premium.
The magnetite occurs in minimally metamorphosed soft siltstone which makes it easy to process into products suitable for a wide range of high quality steel production processes.
“Lodestone’s tenements are positioned in the better areas of the Braemar iron province with in-situ magnetite levels at better grade and waste to ore ratios than other projects. The resources are at or close to surface thus requiring minimal pre-stripping,” Williamson said.
“Lodestone’s magnetite concentrate can be used in direct reduction steel production in the Middle East and North African region, and also as a sinter blend in Asia.”
Braemar magnetite concentrates have very low levels of sulphur, phosphorus and alumina, which mean its products can command premium market prices.
In some major iron ore production regions, “haematite grades and resources are diminishing, and associated deleterious elements increasing, [therefore] bringing a high-grade concentrate with low deleterious elements into the market is timely and keenly awaited by the global steel industry,” he said.
There are many potential funding avenues open for the further development of Olary Flats and Lodestone Mines.
“For example, an IPO is an option as the feasibility studies get to a stage of greater clarity,” Williamson said. “Off-take funding and unincorporated Joint Ventures represent other avenues.”
The company will complete a class four pre-feasibility study for the project in Q1 2021 and is part way through a high-level bankable feasibility study.
Once these are finalised the company can move on to the project’s construction phase.
Lodestone Mine’s chairman, Gordon Toll, has a long and strong background in the iron ore industry.
Toll worked for a range of major mining companies throughout his career including, BHP, Rio Tinto and Ivanhoe Mines before taking a more entrepreneurial path.