Special Report: With a proposed government funded railway picking up serious momentum, Strike’s Apurimac iron ore project in Peru could get new legs.

Cost effective transport infrastructure is critical for the success of bulk resource projects such as coal and iron ore, especially if said infrastructure does not impact on the project’s capital expenditure.

This is certainly the case for Strike Resources (ASX:SRK) which could well benefit from the growing momentum for a Peruvian government initiative to build the Andahuaylas Railway, which is being planned to specifically to carry bulk commodities such as iron ore and would run between the port of San Juan de Marcona and inland city of Andahuaylas, where Strike’s Apurimac iron ore project is located.

The company, which has been working with the Southern Railway Study Group as potentialy the biggest user of the proposed railway, noted that progress on the ‘Economic Study into Feasibility of Andahuaylas Railway’ is continuing apace with completion expected in May 2020.

Notably for the company, the study has already confirmed that the preferred route for the railway has the railway terminating at the Andahuaylas airport, which is located just a few hundred metres from Strike’s Apurimac project.

Substantial work has already been put into surveying and geotechnical drilling at selected points along the route.

Additionally, Peruvian media has started to touch on the proposed benefits of the railway project, while the Regional Governor of Apurimac, Baltazar Lantarón, recently met with Peruvian President Martín Vizcarra to promote its development.

Should the railway project go ahead, it will dramatically reduce the capital costs for Strike to bring the project into production by delivering a large-scale, third-party funded transport solution directly to its doorstep.

The company is also working with a number of large mining companies with projects close to Apurimac that could also benefit from the railway to actively consult with the government and encourage its development.

Strike’s Apurimac iron ore project in Peru (foreground), with the Andahuaylas airport (background) which is the preferred location for the Andahuaylas railway terminal

Apurimac Iron Ore

Strike’s Apurimac project, which is just 20km from the city of Andahuaylas, is one of the highest grade, large-scale magnetite projects in the world with a current resource of 269 million tonnes at 57.3 per cent iron, more than half of which is in the higher confidence indicated category.

Indicated resources have sufficient information on geology and grade continuity to support mine planning.

The broad, continuous and regular deposit shape also lends itself well to the relatively low stripping ratios for lower cost open cut mining.

Apurimac iron ore also features excellent metallurgical properties that suggest the potential for direct shipping ore, which would require minimal processing, and coarse-grained soft magnetite ore at depth that could produce a “sinter fines” product using dry magnetic separation.

More than $50m has been invested by Strike since 2005 on acquisition, exploration, study and operational costs relating to its Peru assets, including a pre-feasibility study for Apurimac that was completed in 2008 and updated in 2010.

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>> Now watch: 90 Seconds With… William Johnson, Strike Resources.

This story was developed in collaboration with Strike Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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