Strike in for Paulsens East long haul as mining decision looms
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Strike Resources has confirmed the placing of an order of 13 Ultra Quad road trains for its Paulsens East iron ore project in the Pilbara, as it progresses towards securing a mining permit.
Strike Resources (ASX:SRK) is targeting a final investment decision for Paulsens East in Q3, and the early order of the 13 prime movers and 52 trailers by Campbell Transport for exclusive use on the project will ensure haulage capacity is at hand once production begins.
The Ultra Quad road trains will each be 60m long, with 150 tonne haulage capacity. Strike said the decision to order before the final investment decision highlighted its confidence in the project and anticipated constraints on the availability of suitable long distance haulage trucks in the months ahead.
The company has also resubmitted an updated mining proposal to the Department of Mines, Industry, Regulation and Safety (DMIRS) that includes responses to a number of clarifications sought by DMIRS.
DMIRS had previously approved the management plan for the project in April.
Strike has also received a critical licence to extract ground water to support proposed mining operations. The water licence will allow the company to proceed with borefield development work while the road trains ensure the transport logistics are in place to move ore from the project to the selected port.
The company expects to have all permitting and approvals in place to allow the start of project site works in the third quarter of 2021.
Paulsens East is expected to generate pre-tax cashflow of $167m over its first four years from production of 6 million tonnes of iron ore.
Internal rate of return and net present value, both measures of a project’s profitability, were estimated at 213 per cent and $140m respectively.
With iron prices currently trading more than US$200 ($256.57) per tonne, these figures are looking decidedly conservative given that they are all calculated on the assumption of a US$100/t iron ore price.
Strike has shortlisted its preferred contractors that will provide the key mine construction, mine and haul, drill and blast, crushing and screening services with early engagement agreements expected shortly.
The company is also evaluating alternative port options.
While it has continued to advance preparations for possible export through the Utah Point Multi-User Bulk Handling Facility at Port Hedland, Strike is also considering export through alternative ports such as Onslow, which is less than half the distance from Paulsens East compared to Utah Point.
It will decide on which port to export from closer to its final investment decision.
Other work includes finalising arrangements to upgrade a nearby private airstrip for its fly-in, fly-out work force and the preparation of a development application for the planned mining village to accommodate its workers.
Meanwhile, Strike’s battery metals spin-off Lithium Energy (ASX:LEL) yesterday
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.