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need to be prepared that the

pricing structures will remain

similar for the next decade,”

Vorster said.

“The 8 mtpa for 15 years

case just doesn’t work in

terms of margins on the pro-

ject. So, the key milestone in

the short term, over the next

3-5 months, is to prove up

additional tonnes for Buck-

land so that it becomes a 15

mtpa for 15 years business

case.

“Once that business case

is in place, it will be easier

for us to convert the MoU to

a binding JV agreement and

so on.”

Vorster said his company

was also looking at Sinos-

teel as a potential buyer of An artist’s impression of the 20 mtpa multi-commodity, multi-user port facility BCI is proposing to build
the Buckland ore and not
just a marketing agent, with at Cape Preston East

the Chinese firm expected to use its ex- of some concern to us junior companies BCI’s involvement in the Carnegie pot-

tensive network in Asia to help find other because we all have 57-58% iron ores. ash project – a JV with Kalium Lakes Ltd

customers. “You will have heard the debate – has presented “massive technical syn-

Buckland has emerged as the lead whether this is cyclic or structural, I think ergies” with Mardi, according to Vorster,

project in BCI’s new-look portfolio that there’s probably elements of both. So, I due to the similarities between pond de-

now boasts potash, salt, gold and base prefer to look at it from a conservative signs and salt extraction methods.

metals assets. However, iron ore will still point of view and prepare our BCI busi- A scoping study on Carnegie, 220km

remain the company’s main game, par- ness cases on a need to make money, north-east of Wiluna, is due in April and

ticularly with BCI also benefiting from its even with higher discounts remaining.” BCI, which holds 15% and its looking to

interest in the Iron Valley mine operated BCI will look to advance Buckland in acquire up to 50%, has been encour-

by Mineral Resources Ltd. parallel with the Mardi salt project, about aged by the latest auger sampling results

BCI’s interest in the operation yielded 100km south of Dampier. A PFS on Mar- of grades of up to 4,790 mg/L, equivalent

the company $18 million EBITDA for di is due for completion next quarter. to a SoP grade of 10,674 mg/L.

FY2017. Last year’s scoping study found a Several senior members of the Kalium

“That was an excellent result for us, 3-3.5 mtpa operation could be devel- Lakes team are former Iron Ore Holdings

particularly in the context of some critics oped at Mardi for an estimated capex of employees who worked under Vorster

who over the years, sometimes maybe $225-255 million, with operating costs earlier this decade, a catalyst to the for-

tongue in cheek, were saying to me that of $19-21/t FOB to return a margin of mation of the JV early last year.

we would never receive a cent from the roughly $26-28/t. Other key metrics from “We rate the management team of

original transaction in 2012,” Vorster the study include a pre-tax NPV of $290- Kalium Lakes very highly and we are ab-

said. 380 million, pre-tax IRR of 25-27% and solutely loving the synergies and the IP

“The results in the last year certainly annual EBITDA of $80-100 million. they’ve developed on their Beyondie pro-

have proven that it could be a very valu- Rio Tinto Ltd dominates the salt indus- ject, which they are transferring directly

able asset for BCI in the future. I can’t try in Australia, but Vorster is confident over to Carnegie,” Vorster said. “In turn,

emphasise enough how much we admire there is enough room in the market for a there’s lots of synergies with us being

the operational efficiency they [Mineral junior such as BCI. involved in Carnegie that we’re transfer-

Resources] have achieved at Iron Valley. “The barriers to entry into the salt ring to our Mardi salt project.”

We have a strong working relationship.” game are very high and the main bar- Vorster said his company would at-

While iron ore prices remained rela- rier to entry is geography,” Vorster said. tempt to finalise the ownership structures

tively stable in 2017, Vorster is not mak- “Mardi in the experts’ opinion is one of of both Buckland and Mardi in 2018.

ing any bold predictions about where the the last – if not the last – opportunities for “We believe the market will only really

key steel-making ingredient is headed the development of a large-scale evapo- place significant value against those two

this year and beyond. rative salt production system because assets if there is certainty around the

“The headline 62% iron price contin- we’re right on the Pilbara coast. monetisation pathway,” he said.

ued to outperform the expectations of all “We see great potential for a jun- Various exploration activities are also

the bearish market commentators and ior matching up with a larger, say Chi- planned for BCI’s gold and base metals

every time they talk the iron ore price nese, partner to break into that industry. targets at Marble Bar, Black Hills and

down it bounces back and then some,” There’s 50-60 mtpa growth forecast in Peak Hill.

he said. the next decade in that chemical, chloral- – Michael Washbourne
“On the other hand, however, it’s fair to kali industry for salt and we see 3 mtpa

say the discounts for anything lower than from a junior like BCI as being very fea-

62% iron remain quite wide and that is sible.”

AUSTRALIA’S PAYDIRT FEBRUARY 2018 PAGE 9