Shree spikes as it advances Nelson Bay
Shares in Shree Minerals Ltd (ASX:SHH) surged more than 30% on Tuesday after management informed the market that the company was actively advancing the re-permitting activities that form part of the development process of the Direct Shipping Ore (DSO) project at Nelson Bay River Iron in north-west Tasmania.
An advanced working draft of the Development Proposal and Environment Management Plan (DPEMP) has been submitted to the Environmental Protection Authority (EPA) for their review as part of the assessment process.
The location of Shree’s wholly owned Nelson Bay River Project including Mining Lease 3M/2011 is shown below.
Progress at the project comes at an opportune time given that the iron ore price has maintained its strong momentum.
Management said that the iron ore price had continued to improve, rising to a range around US$120 per tonne (CFR China) for benchmark 62% iron.
The group also highlighted that there had been a substantial reduction in discounts for medium grade iron ore such as the 58% iron that Shree produces.
Coinciding with these dynamics, there has been further improvement in premiums for material with lower impurities like low alumina (as previously produced by NBR) as Chinese authorities continue their emphasis on environment control.
The reduction in the Australian dollar against the US dollar is also working in Shree’s favour.
The iron ore prices in Australian Dollar terms have further improved due to the exchange rate of the AUD with USD at around US$0.70 levels compared to around US$0.95 levels when the NBR project was last operating in 2014.
Effectively, the market prices have more than doubled for the company’s DSO iron ore products in the last year, due to improving fundamentals in the sector.
In management’s view, any near-term supply response is expected to be limited, particularly with little latent capacity left at major iron ore exporting ports and railways in Australia.
Shree to benefit from existing infrastructure
NBR has a JORC compliant global iron Resource of 11.3 million tonnes, including Goethitic-Hematite Resource of 1.4 million tonnes and magnetite Resource of 7.8 million tonnes.
The project has three types of resources: Direct Shipping Ore (DSO), Beneficiable Low-Grade Resource (BFO) and a Magnetite Resource.
The Resource at NBR covers approximately one kilometre in strike length of goethite-hematite mineralisation including approximately 400 metres of magnetite.
The magnetite resource can produce high grade concentrates for Blast Furnace Pellets (BFP) and Dense Media Magnetite (DMM).
A cap of oxide resource covers the magnetite resource and extends southwards for a further 600 metres of strike.
The oxide resource is composed of goethitic-hematite DSO and magnetic goethitic-hematite material amenable to beneficiation.
NBR was previously producing fines and lump DSO products until being placed on care and maintenance since June 2014 following sharp falls in the iron ore price.
Following the recent improvement in iron ore prices, management has commenced actively pursuing re-permitting activities forming part of development process of DSO project at NBR.
Shree is seeking approval to re-open the mine that would allow the company to complete the existing DSO pit by extraction, processing and shipment of the remaining hematite ore.
The revised project will utilise associated infrastructure including the existing Waste Rock Dump (WRD), Run of Mine pad, roads, water and other infrastructure, all located within the current mine footprint.
South DSO pit 25% complete at 15 metres
The DSO does not require major processing beyond crushing and screening, allowing immediate trucking to the port where it is shipped to overseas markets.
The south DSO pit (SDSO) was developed in 2013, and production commenced in November 2013 with first shipment occurring in January 2014.
The iron ore shipments totalled 181,000 tonnes historically.
The NBR product (DSO Lump and Fines) has been very well received and is in demand by customers due to its low impurities like alumina (Al2O3) at only 1.3%.
Management intends to extend the SDSO pit to a depth of approximately 80 metres in order to mine the remains of the near-surface oxidised ore body which comprises DSO hematite.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.