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DIGGeRs & DeALeRs

Juniors hardened

for crack at iron ore market

nother iron ore boom has arrived and have the size of project to justify a big
AVenture Minerals Ltd is poised catch spend and we are retro-fitting what we
the boat this time around. have.”
Back in 2014, the company had started An August 2019 feasibility study on Ri-
mining the Riley DSO hematite project, ley – based on a $US90/t 62% iron ore
north-west Tasmania, just as the iron ore price – provided the impetus for Venture
price tanked. to pursue $5 million to achieve first DSO
Riley is a two-year, 1 mtpa project that from the 1.8mt @ 57% iron ore at Riley.
Venture can bank on to stoke its wider Prosperity Steel United Singapore Pte
portfolio, namely the flagship Mt Lindsay Ltd has committed to full offtake from Ri-
tin project in Tasmania, so the opportu- ley, which will deliver post-tax cash gen-
nity to capitalise on a buoyant iron ore eration of $31 million, IRR of 303% and
market is being embraced. post-tax NPV of $27 million based on two
Since then, the iron ore price has only years of production.
flickered with opportunity. A small win- Riley is within 2km of a sealed road,
dow open in 2017 but quickly shut again making for easy access to port at operat-
and last July saw prices hit $US120/t in ing costs of $56/t FOB.
the wake of the Vale S.A. tailings dam Road and port access agreements
tragedies in Brazil. However, while punt- have been completed, with dry screening
ers were lapping up the strong gold price and other mining associated activities in
environment at Diggers & Dealers 2019, progress at the time of print.
bearishness in other commodities, in- “We are ahead of the curve of the new
cluding iron ore at $US85/t, were being producers of our size because of the
lamented. timeframe to get these things running.
Apart from the major producers, any Any potential expansion from Rio Tinto
other iron ore hopeful would struggle to [Ltd], BHP [Ltd] or Fortescue [Metals
make profits from $US85/t and entering Group Ltd] could be done by tweaking
this year it looked as though the market things here and there to get another 1 Andrew Radonjic
would be shut to juniors again. mtpa, but it won’t be significant [expan-
Few pundits were anticipating that sion] because they have already expand- tralian State Government approval for
a global pandemic would hit so hard in ed previously,” Radonjic said. the mining proposal and mine closure
2020 with wide-ranging ramifications. “I’d imagine the risk profile to expand plan for Iron Ridge and executing a min-
The lockdown has compromised sup- again maybe a little too high for them, al- ing cooperation and benefits agreement
ply chains in various commodities, im- though they may change their minds de- with the Wajarri Yamatji native title claim-
pacting prices for several minerals in- pending on how long this infrastructure ant group one, Fenix Resources Ltd an-
cluding iron ore ($US116/t at the time of boom or how significant the re-emer- nounced support for a $15 million place-
print). gence of China is.” ment to develop the project had been
Demand side dynamics are also Radonjic hoped to have financing received.
changing as countries such as China locked away at the time of print in order Hartleys Ltd led the placement at
implement stimulus packages based on to get the first ships loaded with Riley ore 14.5c/share, with new Australian and in-
heavy infrastructure spending to reboot while prices remained robust. ternational investors participating in the
economies stalled by COVID-19. “We are working pretty hard to get that raising for Fenix’s Iron Ridge project,
“At some stage there is going to be a debt financing done. It has had it’s chal- about 480km by road to Geraldton port.
bit of nation building after this crisis and lenges because it is not much we are Fenix was close to finalising an offtake
they will need steel, whether it is Europe asking for so it has generally been too agreement for Iron Ridge, a 1.25 mtpa
or US or anywhere else. I think there is much hassle for the banks or anyone like high-grade iron ore project slated for a
going to be a huge requirement for steel that who wants to look at it but a bit too 6.5-year mine life.
with governments creating jobs. I think much for an equity raising, so it is a bit “We are advanced on all of those
we are in a good space,” Venture man- of an awkward space. We have certainly agreements and we will be announcing
aging director Andrew Radonjic told Pay- had some non-traditional offers as well,” conclusion of them in the next month
dirt. Radonjic said. which will then pave the way for award-
“Hopefully the iron ore price stays An indication of the liveliness within ing mining contracts and road transport
above $US100/t for the next two years, the junior iron ore sector is the support contracts, port agreements, etc. with the
but our job is to get costs down as much for projects being garnered by Venture’s aim of being in production by the end of
as possible as we are a relatively high- peers in the space. this year and making our first shipment in
cost producer because we just don’t On the back of securing Western Aus- 2021,” Fenix managing director Rob Bri-
continued on p60
Page 58 OCTOBeR 2020 aUSTRaLIa’S PaYDIRT