CZR Resources Managing Director Dr Rob Ramsay acknowledges taking the right road to production is vital for the Pilbara iron ore aspirant. That will become more apparent when results of CZR’s Robe Mesa definitive feasibility study emerge, however a Queensland resource finance firm says CZR’s best infrastructure option could be a gamechanger.
In a detailed report on the company and its cornerstone project, Matau Advisory says Robe Mesa is shaping up as one of the lowest-cost entries into the ranks of WA iron ore producers for a junior and Matau suggests shipping out of Onslow rather than the originally contemplated Port Hedland can make a material difference to the project’s overarching economics.
CZR’s December 2020 prefeasibility study contemplates a two million tonne per annum direct shipping ore project at Robe Mesa that has been modelled up over an initial five-year mine life for now. The PFS outlined robust financial metrics for a project expected to cost A$51 million to build.
The study outcome and record-breaking surge in the iron ore price have trained more eyes on CZR, which has a plum portfolio of WA projects joint ventured with major shareholder, celebrated prospector Mark Creasy. The company is chaired by former Atlas Iron boss David Flanagan, who rounds out a cast of solid WA resource players who are backing the company to get into production.
CZR signed a memorandum of understanding with the operators of the Onslow Marine Support Base in December to jointly explore prospects for establishing facilities to enable barging and trans-shipping from the port at Onslow, about 180km west of Robe Mesa.
That’s a significant step back from the 420km proposed haul that was originally contemplated to Utah Point at Port Hedland costed in CZR’s PFS.
The PFS uses a road haulage factor of A$35.10 per tonne, or 8.4c per tonne kilometre, for the 60m quad road trains that would cart its product up the Great Northern Highway.
Using the same unit haulage rate for the shorter Onslow run carves a hefty $20/t off costs, says Matau. CZR says the differential is A$50 million a year for the 2mt/pa in the PFS.
It is a shift that clearly changes the value case for the project and the company, says Matau principal, Andrew Pedler.
He says the commercial robustness of Robe Mesa without the Onslow transport boost is based on a range of factors, including the low modelled strip ratio of the channel iron deposit and ease of crushing and screening the all-fines product the company aims to ship.
The total JORC 2021 indicated and inferred resource of 89.1mt at Robe Mesa is low in phosphorous at an average 0.05 per cent and sits above the water table in two flat-lying sheets.
More than 55 per cent iron potentially makes the product marketable as DSO according to CZR. Rio Tinto sells 34mt/a of channel iron deposit, or “CID” DSO from its neighbouring Warramboo and Mesa deposits into long-term markets in Asia.
CZR’s path to production at Robe Mesa is one previously travelled by Flanagan and others in the team steering the project to completion of the definitive feasibility study, expected in mid-2022, and beyond. Flanagan took Atlas Iron from a junior exploration company to an ASX Top 100-listed iron ore producer in the mid-2000s.
Consultant manager of Robe Mesa studies, Jeremy Sinclair was a former Chief Operating Officer at Atlas Iron who oversaw the commissioning and ramp up of Atlas’ five mines. He also held key management roles in the Pilbara iron ore operations of Rio Tinto.
History says iron ore prices won’t stay at current levels forever and Dr Ramsay says Onslow and a shorter haul from Robe Mesa has the potential to build additional resilience into CZR’s project blueprint in the event of a pull back in the current extraordinary iron ore price.
He says: “The advantage for Robe Mesa is that by using Onslow it is the closest new mine to port of anything being proposed in Western Australia and it’s likely that with proximity to port the operating cost is going to allow it to remain profitable in the event there is a significant retreat in the iron ore price.”
CZR has moved ahead with definitive study work on Robe Mesa and in parallel has pegged a mining lease to cover the current resource and surrounding area required for critical infrastructure.
The company has also commenced engagement with the relevant local native title party and kicked off more environmental fieldwork.
Budgeting and planning for drilling to lift the confidence of the JORC resource and mining reserve are said to be well advanced.
Since signing the MOU with the private operators of the proposed port expansion at Beadon Creek in Onslow, Onslow Marine Support Base, CZR has provided information such as likely haulage parameters and product specifications so these can be factored into port design and any future considerations related to traffic movements, dust and noise.
Matau has Robe Mesa moving into production as early as December 2022 if CZR can successfully navigate through the upcoming feasibility study, financing, approval and development milestones.
Expansion from the nominal start-up rate of 2mt/a to 3mt/a is seen by the company and its backers as a low-cost expansion path once the initial mining and transport infrastructure – including a 30km connecting road from the mine to the Great Northern Highway – is in place.
And if the “Onslow Option” becomes a reality by then, there will be plenty of fat built into the project to account for any DFS misses and/or slide in the iron ore price.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
