Mining to create first stockpiles of lump DSO for shipment is expected to commence within 4 weeks. Pic: Getty
Strike sets countdown for first shipment at Pilbara’s next iron ore mine
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Strike Resources is on the road to production at the Paulsens East iron ore project in WA – Literally. The company has just kicked off development of the mine’s haulage road as it moves towards production of first ore on ship.
The ~18km haulage road will connect the mine to the public Nanutarra Road, and has an expected 10 – 12 week construction timetable.
It’s the first step in the Stage 1 production development of Paulsens East, and once completed, four trailer ‘quad’ road-trains will carry direct shipping ore (DSO) to Port Hedland for export.
Mining to commence next month
Strike Resources (ASX:SRK) is finalising its outstanding contracts with key suppliers and preferred contractors for mining and truck haulage.
And the company expects to commence mining within four weeks, to create the first stockpiles of lump DSO for shipment.
High prices mean attractive margins
Iron ore benchmark prices are continuing to strengthen, with current benchmark price in excess of US$150/t – which Strike says indicates the potential for attractive near-term operating margins for shipments of DSO from Paulsens East.
The forecast average C1 Costs are ~US$60/t for life of mine (LOM) and the total LOM breakeven price is ~US$87/t CIF (Cost, Insurance, Freight) China (inclusive of royalties).
“This is a very exciting time for the Company as development towards first ore on ship is now underway,” MD William Johnson said.
“With iron ore prices continuing to strengthen, the timing could not be better to bring the Pilbara’s next iron ore mine into production.”
Staged development approach makes sense
Strike plans a production schedule of up to 2Mtpa of DSO from Paulsens East over a ~3.5-year LOM, which is underpinned by the probable ore reserve of 6.2Mt (within the current indicated mineral resource of 9.6Mt).
To provide a capital efficient ramp up of mining operations and to de-risk any potential port constraints, the company plans a two-stage development approach:
- ▪ Stage 1 Production will focus on surface detrital and low strip ratio materials of up to 400,000 tonnes to be shipped through the Utah Point Multi-User Bulk Handling Facility at Port Hedland; and
- ▪ Stage 2 Production at an annualised rate of up to ~2Mtpa is proposed to transition from Utah Point to Port of Ashburton at Onslow (reducing trucking distance by ~365kms), with Stage 2 ramp-up expected to be partially funded by Stage 1 cash flows.
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.
