Magnetite Mines Ltd (ASX:MGT) is making strong progress in efforts to optimise the Razorback Iron Ore Project in South Australia aimed at increasing the project’s commercial status while meeting evolving market conditions.
The company kicked off a suite of optimisation studies in September last year aimed at defining the go-forward scope for a refocused definitive feasibility study (DFS), which is due for completion at the end of this quarter.
Among the key objectives, MGT plans to increase Razorback’s production to at least 5 million tonnes per annum from the current 2.2 million tonnes while also improving the project’s environmental credentials through producing higher-grade iron ore concentrates and the potential electrification of major equipment.
Making good progress
Studies are advancing well and according to timeline and budget, with initial estimates received for a potentially larger-scale development from its engineering partners.
MGT has also sought expert advice on pricing premiums for high-grade iron ore concentrates that could be produced at Razorback and decarbonisation benefits to meet Environmental, Social and Governance (ESG) expectations as well as to attract investment.
As well, confidential negotiations with key stakeholders are being held to secure sustainable access to land, power, water, rail and port facilities to ensure the project’s successful delivery.
Work underway
MGT expects the study to be completed by the end of March, as planned.
The balance of current work programs include:
- Class 4 engineering estimates for each concentrate transport scenario;
- Engineering optimisation and capital estimation for processing plant comminution options;
- Dry magnetic separation assessments, for early-stage rejection of waste material;
- ‘Value-in-use’ assessments of proposed concentrates, inclusive of both environmental benefits (downstream carbon intensity reduction) and expected pricing premiums;
- Finalisation of metallurgical test-work;
- Optimised mine planning and scheduling; and
- Peer and ore reserve review of mining scenarios.
Changing market conditions
MGT undertook a strategic review of the project in June last year to respond to changed market conditions, including increasing market premiums for high-grade, high-quality magnetite concentrates as well as metallurgical test-work results which supported the potential to produce Direct Reduction (DR) grade concentrates.
Razorback hosts 3 billion tonnes of resource, inclusive of a 473 million tonnes probable ore reserve calculated to support a 30-year mine life at a 2.2 million tonnes per annum production rate.
The current DFS project configuration is based on the 2019 scoping study and 2021 pre-feasibility study, which sought to minimise upfront capital with a small-scale development targeting a blast furnace iron ore concentrate product.
This positioning was driven by market conditions at the time, including sentiment towards magnetite in domestic capital and investor markets.