Magnetite Mines’ imminent Pre-Feasibility Study has been substantially boosted by the release of an ore reserve sufficient for 30-year plus mine life at its Razorback iron ore project.

The ore reserve of 472.7 million tonnes — with a mass recovery of 14.5%, or about 68.5Mt of 67.5% iron ore concentrate – has been deemed to be economically viable, meaning it can be used to value the project in South Australia with a reasonable degree of confidence.

Razorback’s ability to produce a premium iron ore product is also increasingly important, given the substantial $US90 spread between 58% iron ore and premium 65% iron ore.

Magnetite Mines’ (ASX:MGT) chairman and chief executive officer Peter Schubert said today’s update is a result of the “culmination of many months of meticulous and dedicated work by our team, and is an important validating step”.

Importantly, the ore reserve effectively forms the basis for the PFS, which is largely complete and undergoing final quality control checks for the integrity and accuracy of the financial model.

Speaking to Stockhead, technical director Mark Eames said that while an ore reserve is not essential for success, it provides investors with more detailed information upon which to make a lower risk investment decision.

This also speaks to the company’s dedication to stick to a methodical, industry best practice development process.

Magnetite Mines is already funded to accelerate work on additional programs to accelerate the project’s development after it completed a $7.5m options conversion earlier this month.


Processing plant

The ore reserve will feed a 12.8Mt processing plant that will produce a nominal 2Mt of iron ore concentrate per annum for a period of at least 30 years.

While this is substantial for a small project like Razorback, Eames said it’s a conservative estimate.

“What we are looking at with the PFS is an optimisations around capital estimates, the production rate, and looking at selective mining and ore sorting,” he added.

“The potential for these optimisations is not included in these numbers.”


Potential for growth

It is also worth noting that while the ore reserve is substantial, it represents just 31% of the overall indicated resource of 1.5 billion tonnes, and about 16% of the total defined resource.

“This is a large reserve – few companies have a such a long life reserve, but it’s just part of a much bigger resource that we can convert in the future,” Eames said.

This article was developed in collaboration with Magnetite Mines, 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.