Magnetite Mines (ASX:MGT) is bucking the malaise in a difficult iron ore market with magnetite deposits in the Mawson Iron Province of South Australia gaining favour in Chinese circles and an innovative approach to potential future mining of the deposit.
The Mawson Iron Province is located 250 kilometres NNE of Adelaide and may just be the largest potential source of high grade, low impurity magnetite concentrates in the world.
Its Razorback Project contains a magnetite concentrate equivalent resource of 418 Million tonnes at a very high grade of 67.4% magnetite concentrate equivalent.
It gains further appeal when future operating and capital costs could be reduced given use of truckless mining, using fully mobile crushers and conveyor belts, slurry transportation of the concentrate and the use of a floating iron ore port.
China's largest state owned ship building company, Bohai Ship Building and the largest private shipbuilder, Sinopacific Shipbuilding are working on the design details of the hull and associated maritime equipment for a floating port.
This work is proceeding at no cost to Magnetite Mines, and at this time on a no obligation basis.
The chairman and CEO Gordon Toll believes his company's innovative approach can deliver large tonnages of magnetite concentrates at costs competitive with those of Direct Shipping Ore (DSO).
Formerly Royal Resources (ASX:ROY), Magnetite Mines is looking for financing from major Chinese banks and finance houses, both private and state-owned toward development of the Razorback Project.
The project with high grade magnetite concentrate may find favour with Chinese steel mills wary of replacing domestic magnetite with inferior grade material from the Pilbara, Minas Gerais (Brazil) or Africa.
The discussions are centring around offtake agreements, construction agreements and DFS funding.
In fact, discussions are continuing with three major steel mills and seven mid-size mills with confidentiality agreements underway with these mills as a prelude to negotiating MOU’s or conditional contracts for off-take agreements to buy magnetite concentrates from Razorback.
While this is all ahead for aptly named Magnetite Resources, it moves to the beat of a different drum in the current challenging iron ore market.
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