CZR signs MOU with Onslow port

CZR Resources is set to cut costs for its developing Robe Mesa iron ore operation in WA’s Pilbara region after putting in place a memorandum of understanding with the owners of the port facilities at Onslow. The privately-owned Beadon Creek facilities at Onslow are located 180km to the west of the company’s developing iron ore project.

The use of Beadon Creek will drastically reduce the haulage distance from the mine gate to port and should positively impact on the company’s financial studies.

CZR’s recently released pre-feasibility study, or “PFS” had proposed using the Utah Point bulk handling facility at Port Hedland, which is 420km from Robe Mesa by road - the proposed use of the Onslow port would cut the transport distance by nearly two-thirds.

Whilst the move to the Onslow port will reduce trucking costs it should also improve turn-around times and may even have the potential to increase production at the project according to the company.

CZR’s Robe Mesa iron ore project is located in the venerated Pilbara region of Western Australia. The proposed operation is situated around 150km south-west of Karratha. It has excellent access to infrastructure, including being a mere 30km from the North-West Highway which connects the various port facilities and coastal towns along the Pilbara Coast.

Robe Mesa hosts a substantial JORC 2012 resource that weighs in at 89.1 million tonnes grading 53.7 per cent iron, which can be readily calcined to 60.2 per cent iron according to management. The company’s PFS has focused on the near-surface, high-grade portions of the ore body, with the study based on a “proven ore reserve” of 8.2 million tonnes grading 56 per cent iron.

The PFS delivered a solid set of figures for the proposed minimum 5 year, 2 million tonne a year operation including low strip ratios, a low estimated capital cost of just $60.1 million and life of mine revenues that clocked in a massive $956.4 million – based on an iron ore price of US$90 per tonne which is looking light on when compared to today’s iron ore price.

The study was based on conservative parameters and an assumed price which is significantly lower than the current market price. There is also scope for a reduction in the unit costs given that the processing and mining load and haul capacity exceeds the initial planned production rate of 2Mtpa.

CZR identified certain opportunities as part of the PFS which included increasing the mineable reserves and overall mine life through development drilling, increasing production, reducing capital costs and reducing haulage costs by using a port facility closer to the operation.

CZR will explore various options for using and enhancing the existing facility at Beadon Creek, which includes a 250,000 square metre hardstand, an inner and outer harbour and a channel to deeper water.

The company is modelling various options for utilising the OMSB facilities which may include stockpiling and using barges to tranship the ores to ore-carriers moored in the offshore Onslow anchorage or the development of the port and wharves at Onslow to handle larger shipping.

In recent years Onslow has become an increasingly popular regional centre for oil and gas operations, with a number of companies now running processing facilities and logistical hubs from the coastal Pilbara town. South of Onslow, in a designated industrial area, Chevron runs the onshore component of its massive Wheatstone natural gas operation, whilst BHP’s smaller Macedon gas plant lies immediately to the south of Chevron’s infrastructure.

The OMSB facility was established, in part, to support these gas operations and may expand further to facilitate the development of CZR’s iron ore mine.

Despite CZR’s profitable PFS only being put to bed in recent weeks, the company has its nose to the grindstone as it looks to eke out every enhancement it can find to improve the economics of the developing operation at Robe Mesa.

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