CZR Resources has cranked up its Pilbara-based Robe Mesa iron ore reserves by a massive 230 per cent to 27.3 million tonnes at 55 per cent iron, or 62.2 per cent iron after calcining.
The company’s boosted reserves underpin an initial eight-year mine plan production of 3.5 million tonnes per annum with a cash cost (C1) of $57 a tonne and an impressive internal rate of return of 70 per cent at an iron ore price of $131.1 per tonne. And CZR says there is more scope for growth in its inventory, mine life and production levels by including its Robe Mesa South deposit.
The Robe Mesa deposit is a low-strip ratio, low-capital expenditure direct shipping ore (DSO) project with a rapid and low-cost path to production. The deposit consists of two sub-horizontal sheets of pisolitic ironstone that each improve in quality and grade upwards. The near surface part of the upper sheet hosts the ore reserve.
Iron ore from Robe Mesa is well-characterised and understood pisolitic ore in line with nearby multi-decade iron ore-producing mines. The ore has low phosphorous and upgrades well by driving off, or calcining, volatile components, principally water. CZR says discussions with potential clients indicate that the product is readily-accepted as a DSO.
The Robe Mesa project is in the West Pilbara, 200km south-west of Karratha and 175km from Onslow. It forms part of the Robe Valley channel iron deposits between Rio Tinto’s Mesa A and Mesa J-K iron ore mines.
CZR says its increased ore reserves and revised mine plan will underpin its definitive feasibility study (DFS) for Robe Mesa and expects it to be tabled mid-year. It says the mine will have a low 1:1 waste-to-ore strip ratio during its life, starting with a 3:1 ratio in the first 18 months.
Management says its key project economic data to date, on a 100 per cent basis using a 10 per cent discount rate, includes a low C1 cost of $57 per wet metric tonne, free on board.
It also outlines free cash flow of $260 million at the base-case iron ore price of US$90 (AU$133.1) per dry metric tonne. At the current spot price basis of AU$156 per tonne, the free cash flow would rise to $604 million, leading to a net present value of $342 million for the project, with an internal rate of return of 149 per cent.
Robe Mesa iron ore is targeted as a sinter blend substitute for Rio Tinto’s Robe Valley Fines and FMG’s Super Special Fines, according to CZR. During the life of the mine, the company will stockpile an additional 3.4 million tonnes of low-grade iron ore grading 59.5 per cent iron calcined.
Management does not currently include that ore in its reserves, although it will be considered in its DFS. It says there is also strong growth potential from the Robe Mesa South deposit, which is 5km from Robe Mesa and immediately south of Rio Tinto’s Mesa F iron ore project.
CZR Resources managing director Stefan Murphy said: “The increased Reserves allow CZR to design a larger, lower-cost and more sustainable iron ore project than identified under the 2020 PFS. We see further opportunities to grow the project and deliver more value to shareholders and local stakeholders.”
CZR owns 85 per cent of Robe Mesa and the remainder is held by well-known prospector-turned-investor Mark Creasy, whose interest is free-carried until the completion of the project’s DFS. The company now plans to run a competitive tender process for all capital and operational expenditure items.
After completing its DFS, CZR will finalise and submit regulatory plans and permits to support mining and progress miscellaneous licence applications for the construction of supporting infrastructure. It is working with others to jointly develop a 5 million tonnes per annum iron ore export facility at the Pilbara’s existing Port of Ashburton.
Project finance, strategic partners and offtake facilities are being considered for the Robe Mesa and Port of Ashburton projects.
The last piece of the puzzle after the DFS is delivered will be a final investment decision by the CZR’s board of directors to give the projects the green light. With the economics and iron ore demand looking pretty good, it is hard image anything stopping the project now.
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