A strategic alliance between CZR Resources and Red Hill Iron has been forged to co-operate on developing shared haulage and port infrastructure that supports the companies neighbouring iron ore developments.
CZR says an agreement has been signed with Red Hill in a bid to lower capital costs and unlock mutual operational synergies as it steers towards releasing a definitive feasibility study – ‘DFS’ on its Robe Mesa iron ore deposit.
CZR’s Robe Mesa and Red Hill’s Pannawonica projects are a meagre 12km apart in the iron ore-rich heart of Western Australia’s Pilbara region. The pair recently completed a joint environmental and topographic survey as they look to evaluate a single haulage route linking both projects to the North West Coastal Highway.
Splitting the bill on the haulage route could potentially pave the way forward as the duo work towards future agreements to assess and potentially develop joint port export facilities.
CZR Resources' Managing Director, Stephan Murphy said:“Given we are both developing projects in the same area, a single export route would deliver significant savings through efficiency gains and removing duplicated infrastructure.”
“Increased iron ore export volumes, delivered from both operations, allow us to explore larger, more cost-effective export solutions.”
The Robe Mesa project is a joint venture, with CZR holding 85 per cent and 15 per cent being held independently by private company ZanF.
The deposit forms part of CZR’s Yarraloola iron ore project, 140km south-west of Karratha.
Located within the prolific Robe Valley channel iron deposits, CZR’s cornerstone Robe Mesa deposit is an extension of Rio Tinto’s Mesa F deposit.
Mining stalwart Rio Tinto and joint venture partners Mitsui and Nippon Steel have been mining the channel iron deposits since the 1970s.
CZR recently increased the Robe Mesa mineral resource by more than 50 per cent to 37.5Mt from 24.7Mt whilst maintaining an iron ore grade of 56 per cent.
The updated figure reflects strong assay results reported in March that revealed extensive direct shipping iron ore outside the prefeasibility study – ‘PFS’ pit designs.
Drilling is continuing at the project where the company is targeting the northern extension of Rio Tinto’s neighbouring Mesa F deposit as the company aims to grow its iron ore inventory for the DFS due for release later this year.
The company has already run the rule over Robe Mesa in its 2020 PFS that envisaged 2 million tonnes per annum iron ore production for five-and-a-half years.
According to the PFS, the pre-production capital cost of developing Robe Mesa came in at $51.1 million with a capital payback period of 19 months.
The company believes there is plenty of scope to beef up the project’s economics and is focused on expanding the PFS pit designs to grow the mine life and increase production rates to potentially 3mtpa.
The widely publicised rise in inflation and associated rising costs will require more lateral thinking from the mining sector to cut expenses. Maintaining friendly relations over the fence may pay off for CZR in more ways than one as it looks to develop its Pilbara assets.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
