Strike’s Pilbara iron ore project nearly across the line into production as prices strengthen
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Production of lump direct shipping ore (DSO) from Strike’s Paulsens East iron ore mine in WA’s Pilbara region is imminent with mining contractors mobilised to site.
Equipment mobilised includes excavators, screens, and an on-site sample laboratory with work already underway to generate the first stockpiles of lump DSO for shipping.
The ore will be transported to Utah Point at Port Hedland for export once the 18km haulage road between the mine site and the public Nanutarra-Munjina Road, which is currently at 40% completion, is finished.
Paulsens East is expected to produce up to 2 million tonnes per annum of lump iron ore over a 3.5 year mine life from a probable Ore Reserve of 6.2Mt at 59.9% iron.
This has the potential to be hugely lucrative for Strike Resources (ASX:SRK) given that iron ore is currently trading for about US$150 ($201.35) per tonne, according to Fastmarkets MB.
The company has also received the first draw-down of US$2.5m from iron ore trader and 5.26% shareholder Good Importing International under their US$7.2m loan facility to fund construction of the haul road and initial mine development and production.
“We are delighted with the positive progress made with the Paulsens East Haulage Road. With contractors now mobilising to site to commence production, this is a further significant milestone in the development of Paulsens East,” managing director William Johnson said.
“With iron ore prices strengthening to above US$150/t, the timing could not be better to bring the Pilbara’s next iron ore mine into production.”
The company already produces iron ore from its Apurimac project in Peru with discussions ongoing for a long-term offtake agreement.
Paulsens East is 235km by road from Onslow and 600km by road from Port Hedland.
First stage development, which aims to deliver initial production of 400,000t in 2022, will focus on high grade surface ore and outcrop with a low stripping ratio that will provide cheap early cash flow to bank ahead of the larger Stage 2 development.
The expected 62% lump product attracts a healthy premium over benchmark prices because it does not need to be sintered – making steelmaking cheaper and greener.
Stage 2 will ramp production up to 2Mtpa with exports from the Port of Ashburton near Onslow, which will reduce the trucking distance by more than half.
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.