Red Rock Resources (LON:RRR) announced that Jupiter Mines Limited (ASX:JMS), in which it has a small stake, has begun a feasibility study on its Mount Ida magnetite project in the Central Yilgarn region of Western Australia.
Mount Ida is a key part of Jupiter’s strategy to become a global supplier of raw materials to the steel industry.
Red Rock owns 4.24% of Jupiter and maintains a 1.5% gross production royalty in Mount Ida.
Jupiter’s feasibility study will be based on annual production of ten million tonnes of magnetite concentrate grading over 68 per cent iron.
It is envisaged that the concentrate will be transported along the existing railway from Menzies to the Port of Esperance on Western Australia's south coast.
A scoping study completed in March 2011 found that Mount Ida would be a financially and technically robust project with a project net present value (NPV) for the project estimated at A$1.685 billion.
The NPV is based on a 20 year mine life at 25 Mtpa producing 10 Mtpa of magnetite concentrate and a concentrate price of A$110 per tonne, with operating costs forecasts at AS62.78 a tonne of concentrate and an internal rate of return of 19.8 per cent.
In its own statement Jupiter said that a 40-person camp on the site is now complete and that the company is “superbly placed” to develop Mount Ida as part of its goal of becoming a major supplier of raw materials to the steel industry.
Red Rock also updated on a recent placing of its shares at 6p per share, raising £1m. The placed shares are expected to begin trading on AIM on 30 June, not 29 June as had previously been announced.
Mid afternoon, Red Rock shares were down 0.29p to 6.10p.