Apollo Minerals (ASX:AON) maiden Scoping Study for the Commonwealth Hill iron ore project has supported the potential for a competitive iron ore operation.
The study on the Sequoia deposit has identified processing and infrastructure paths, including that the ore can be trucked 25 kilometres to the Adelaide to Darwin railway and then sent to an export facility at Port Pirie in the Spencer Gulf.
Apollo believes it could land the ore on a free on board (FOB) basis at $64 per tonne.
After the recent completion of the initial Sequoia Mineral Resource estimate by Widenbar and Associates, independent consultants including Battery Limits and Parsons Brinckerhoff Australia conducted processing and infrastructure studies, which have been integrated into the scoping study.
The study assumes that the project will have mineable inventory of 131 million tonnes run of mine with a strip ratio of 1.1:1.
The open cut mine life of about 17 years has a projected output of about 2.5 million tonnes per annum, with sales of 42 million tonnes at 68.8% iron at an exceptionally coarse sizing of around P80 150μm.
The study shows that the operations can be scaled up to 5 million tonnes per annum for more than 20 years by processing iron ore from the Ibis Prospect.
The project will now move to a exploration and resource definition drilling phase and a pre-feasibility study that would pave the way for developing the Commonwealth Hill iron ore project.
The study is based on recent geological modeling of the Sequoia Deposit, where a JORC Resource of 72 million tonnes at 25.9% iron was returned. This included 19.4 million tonnes at 27.7% iron of Indicated resource and 52.6 million tonnes at 25.3% iron of Inferred resource.
The target is within the larger exploration target of 300 million tonnes to 550 million tonnes at 25%-35% iron for the Commonwealth Hill project area. Additional deposits such as the Ibis prospects are yet to be drilled.
Infrastructure Access
The scoping study established that the site is located within key transport infrastructure, with access to and from the site can be had by upgrading the existing road between the project site and the Challenger Mine Access Road with a 20-kilometre extension.
The ore can be trucked 25 kilometres to the Adelaide to Darwin railway and then sent to an export facility at Port Pirie in the Spencer Gulf.
Last May, Apollo signed a memorandum of understanding for port services with Flinders Ports for the export of iron ore concentrates via Port Pirie and Apollo could contract 2.5 Mtpa of port capacity. Stage 1 of the port development for a 5Mtpa capacity is currently underway at Port Pirie.
Analysis
The scoping study underlines the viability of the Commonwealth Hill iron ore project, and Apollo believes it could land the ore on a free on board (FOB) basis at $64 per tonne.
The company's fortunes also look bright with India's Jindal Steel and Power holding 9.25% of the company, potentially becoming an off-taker for the iron ore.
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