IMX Resources (ASX: IXR, TSX: IXR, IXR.WT) is working to substantially increase the resource base at its Mt Woods Magnetite Project in South Australia with the start of a 3,000 metre reverse circulation drilling program targeting coarse, high grade magnetite mineralisation.
Several particularly strong magnetic anomalies have been identified lying around 25 kilometres southeast of IMX’s Cairn Hill magnetite-copper-gold mine and 30 kilometres east of the Snaefell prospect, which currently has an Inferred Resource of 569 million tonnes at 27.1% iron.
IMX has previously outlined an exploration target of 200 to 380 million tonnes at 25% to 35% iron outside of the current resource.
Neil Meadows, managing director, commented: “This new phase of exploration drilling is designed to test the strongest targets with the best potential for the quality high grade coarse magnetite that makes the Mt Woods Magnetite Project unique.
“This is consistent with our strategy to demonstrate the potential of the numerous untested magnetic targets within our tenements, and to significantly increase the resource base of the Mt Woods Magnetite Project to make it more attractive to a potential development partner. ”
Geophysical modelling from recent ground magnetics surveys indicates that four of the new targets have a greater magnetic intensity than the nearby Tomahawk prospect, where up to 9 metres at 44.4% iron was intersected in coarse magnetite earlier this year.
It is expected that coarse grained magnetite that is characteristic of the Mt Woods Magnetite Project will also be intersected at the new targets.
In addition to the magnetite potential, by increasing drill coverage of the most iron rich rocks, this drilling program also has the potential to discover specular hematite in a style similar to Arrium Limited’s (formerly OneSteel) (ASX: ARI) Peculiar Knob mine, located just 20 kilometres to the south of IMX’s Tomahawk prospect.
The drilling program is expected to be completed during November with the results available in the March quarter of 2013.
Cairn Hill cash flow positive
Earlier this week IMX revealed it has reduced cash costs at Cairn Hill Mining Operation by 10%, which has continued to operate as cash flow positive during the past three months.
Another plus for IMX at Cairn Hill is that the company is achieving forecast production rates of 150,000 tonnes per month of DSO coarse-grained iron-copper product, which equates to an above-nameplate capacity rate of 1.8 million tonnes per annum.
The operation is a joint venture (IMX 51%) with Taifeng 49%, with a current sales contract with Vingo and spot sales to Taifeng.
The financial year 2013 budgeted free cash is A$35 to $40 million, based on financial year 2013 forecast index prices of US$143 per tonne 62% iron, $8,682 per tonne LME copper and an AUD/USD rate of 1.02.
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