Peruvian rail plan could deliver the world to Strike’s Apurimac iron project
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Strike’s goal of turning its Apurimac iron ore project into a world-class mine has received a shot in the arm after Peru confirmed plans for a key piece of infrastructure.
Peruvian Prime Minister Guido Bellido confirmed in a recent presentation to the nation’s Congress that the 577km Andahuaylas Railway, which has an estimated cost of US$4.6 billion, will link the producing project with the port of San Juan de Marcona and will be carried out under a public-private partnership scheme.
Local press also reported Minister of Energy and Mines Ivan Merino as saying the railway project could start as early as 2023 with the first section inaugurated by President Pedro Castillo by the end of his term in July 2026.
This is good news for Strike Resources (ASX:SRK), which currently uses trucks to haul direct shipping iron ore from Apurimac to port and has been ramping up operations to meet its targeted annualised sales of about 250,000t of iron ore.
Having access to a railway with a starting point at the Andahuaylas airport, which is directly adjacent to Strike’s Apurimac project, will grant the company a large-scale transport solution that will drastically reduce the capital costs of turning the project into a world-scale mine.
“Having confirmation from the Peruvian Prime Minister for the construction of the Andahuaylas Railway is very encouraging for Strike,” managing director William Johnson said. “Development of the Andahuaylas Railway will allow Strike’s Apurimac Project to scale up to its full potential as a world class iron ore mine and deliver significant benefits for the Apurimac region, Peru, and Strike shareholders.”
Since a study was commissioned by the Peruvian government into the economic, social and technical aspects of building the Andahuaylas Railway, Strike has been working with the Southern Railway Study Group in anticipation of being a major user of the proposed railway.
The study has included an analysis of various railway route options, with the preferred route confirmed as one, which starts at the Andahuaylas Airport.
Besides Strike’s Apurimac Project, the Andahuaylas Railway is also seen as offering an unparalleled opportunity for Peru to unlock the substantial value of minerals located in this inland region, as well as passenger and other cargo traffic.
The Apurimac Project, from which Strike recently shipped its first cargo of iron ore to China, is well able to support world-scale production given that it currently has a JORC Mineral Resource of 269 million tonnes of iron ore grading 57.3%, comprising indicated resources of about 142.2 million tonnes grading 57.8% iron and an inferred resource of 127.2Mt at 56.7% iron.
There is also significant exploration potential given that the deposits are open at depth and along strike with extensive undrilled gravity and magnetic anomalies.
This article was developed in collaboration with Strike Resources, 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.