Strike Resources determines great cashflow potential from Pilbara iron ore project
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Special Report: Feasibility study at Paulsens East Iron Ore Project presents potential for significant cash flow generation and financial returns.
Strike Resources Limited (ASX: SRK) has completed its Feasibility Study on its Paulsens East iron ore project in the Pilbara – and the results look very exciting, with projections of net cashflows of $167 million and a net present value (NPV) of $140 million based on an assumed average benchmark iron ore price of US $100 per tonne over the anticipated four-year life of the mine (currently US$115 per tonne).
Estimated pre-production capital costs are low, at approximately $15.7 million, with an internal rate of return of 213%.
The Paulsens East Iron Ore Project consists of a three-kilometre long outcropping high-grade hematite ridge, containing a JORC Indicated Mineral Resource of 9.6 million tonnes at 61.1% Iron (Fe), 6.0% silicon dioxide (SiO2) and 3.6% aluminium oxide (Al2O3).
Part of the Indicated Mineral Resource has now been converted to a maiden JORC probable Ore Reserve, consisting of 6.2 million tonnes at 59.9% Fe, 7.43% SiO2 and 3.77% Al2O3.
Strike is planning an open cut mine with a production schedule of 1.5 million tonnes per annum of direct shipping ore, totalling 6.0 million tonnes over four years with production underpinned by the Ore Reserve.
Strike’s managing director William Johnson commented that the study was ‘another key milestone achieved in moving Paulsens East towards production’.
“The continued strength to the iron ore price contributes to the robust economics of the Project, which are driven principally by the high-quality nature of the iron ore contained within the deposit and the low life of mine strip ratio.”
Strike is also Investigating opportunities for further upside at Paulsens East, from potential for production of higher grade (63% – 64%) products, extension of mine life and exploitation of surface detrital material.
Strike is proceeding with key activities over the next six months, with the intention of commencing iron ore production in the first half of 2021.
This article was developed in collaboration with Strike Resources Limited, 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.