Perth, Sep 19, 2008 AEST (ABN Newswire) - Aurox Resources Limited (ASX:AXO)(PINK:AUOXF) continues to make significant progress in the development of its Balla Balla titanomagnetite project in the West Pilbara region of Western Australia. An update on the technical aspects of the project accompanies this strategic overview.
The continued turmoil in debt and equity markets has dictated that the Company review its project implementation strategy. In consultation with its key advisers the Company is undertaking a broad ranging review to assess strategic alternatives to ensure that Aurox shareholder value is maximised in relation to the development of this significant resource project.
Commenting on the review the Company's managing director Mr Charles Schaus said, "The Balla Balla project is a world class iron ore deposit which also hosts substantial titanium and phosphate resources. We have long-term sales contracts in place with Chinese steel mills and have locked in long lead capital items and key infrastructure as per our commitment to investors last year. However we could not have anticipated the dislocation in financial markets experienced so far this year. It is not our intention to swim against the tide and accordingly we are developing strategies to ensure that value to shareholders is optimised.
Ideally, any changes to the implementation strategy will not adversely impact on project delivery timetables, however preserving and increasing shareholder value must be our prime objective."
Notwithstanding the difficult nature of debt markets, the Company has received expressions of interest from twelve banks in relation to proposed debt funding for the Balla Balla project. Aurox and its debt advisors have selected a syndicate comprising five banks (Australian and international) in relation to project finance facilities. Bank due diligence will kick off with a site visit scheduled next week.
Aurox's current cash position is AUD$36 million.
Interim Mineral Resource Upgrade
The Balla Balla titanomagnetite resource estimate was increased from 473 to 502 million tonnes following the completion of additional extension drilling to the Western and Central- East pit areas. The result remains consistent with the Company's Resource and Reserve development plan for Balla Balla.
Infill and extension drilling along the Far West area is complete. Resource modelling work to upgrade the current low level Inferred Resources to high level Measured and Indicated Resources will commence once final assay results are received. Aurox anticipates a large tonnage increase to Measured and Indicated Resources thereby making the Far West area eligible for Ore Reserve conversion given associated cost and design parameters are in place.
The Resource & Reserve map below shows the location of the current Balla Balla Project Ore Reserves and Mineral Resources.
BALLA BALLA MINERAL RESOURCES AT 19 SEPTEMBER 2008
Western Pit Area-------------------------------------Class Mt Fe % V2O5 % TiO2 %-------------------------------------Measured 96.0 45.7 0.69 14.0Indicated 20.7 45.6 0.69 13.3Inferred 51.0 45.9 0.72 13.1Total 167.7 45.8 0.70 13.6-------------------------------------Central-East Pit Area-------------------------------------Class Mt Fe % V2O5% TiO2 %-------------------------------------Measured 99.8 45.0 0.63 14.1Indicated 27.2 45.2 0.65 13.7Inferred 15.2 45.2 0.67 13.4Total 142.1 45.1 0.64 13.9-------------------------------------Far West Area-------------------------------------Class Mt Fe % V2O5 % TiO2 %-------------------------------------Inferred 192 43.0 0.61 14.0Total 192 43.0 0.61 14.0-------------------------------------
Note: The Company had expected the new Far West Mineral Resource Estimate to be available this month, however laboratory back logs have slowed assay turnaround considerably. The Company aims to confirm the new Far West Mineral Resource Estimate targeting between 300 to 400 million tonnes by the end of October 2008; based on geological logging, magnetic susceptibility levels and preliminary assay results of the completed in-fill drilling programme which are consistent with the current geological models.
Total Balla Balla Mineral Resource Estimate-------------------------------------Class Mt Fe % V2O5 % TiO2 %-------------------------------------Measured 195.8 45.34 0.66 14.05Indicated 47.9 45.40 0.67 13.50Inferred 258.2 43.71 0.64 13.78Total 501.9 44.53 0.65 13.83-------------------------------------
Engineering Update
All technical aspects of the magnetite project are now well advanced including detailed engineering of the concentrate plant, port dewatering and material handling equipment. Inhouse design engineers, supporting staff and consultants are working closely with FLSmidth and Siemens to finalise engineering and planning in the lead up to construction activities.
Tender documents for mining, civil engineering, accommodation, earthworks, plant erection and other disciplines complementing the FLSmidth/Siemens scope of works have been compiled and tenders will be released and negotiated once appropriate funding and final approvals are in place.
Magnetite Processing Plant
The Balla Balla iron processing plant is designed to commence at 6 million tonnes per annum (Mtpa) concentrate production with a simple, uninterrupted upgrade to 10 Mtpa planned. As announced in April 2008, the Company formalised arrangements with FLSmidth and Siemens securing long lead capital items and initiating engineering. The agreements limit capital commitments pending government and funding approvals. Plant and port layout and circuit design are fixed and detailed engineering is well advanced. Finalised engineering diagrams are incorporated into an interactive 3D model which allows equipment parts to be tracked and detailed geometric and spatial queries to be answered.
The majority of the key and ancillary processing plant equipment is designed to process 10 Mtpa with requirements for a second ball mill, and additional magnetic separators, a tailings thickener and dewatering filters to secure the expansion capacity. The 17MW FLSmidth/Siemens gearless drive ball mill, 7.6 m in diameter by 12.8 m in length, has been conservatively sized to complement the existing circuit design, enabling the throughput load to be shared between the grinding mills, pending feed ore characteristics.
The footprints at the plant and the port sites have been designed for the increased throughput rates, with nominated areas for the extra magnetic separation units, tailings thickener and dewatering filters. The 3D modelling and general arrangement drawings depict the layouts after the expansion to 10 Mtpa production.
The Balla Balla Fuller-Traylor(R) 1400 x 2100 type "TS" Primary Gyratory crushing circuit is designed to process the throughput required to produce 10 Mtpa concentrate annually. The crusher is transportable allowing it to operate near the source of the open-cut mining and thereby reducing mining fleet operating costs (fuel, tyres, etc). A conveyor will transport the crushed material to the processing plant when economics influenced by distance of ore to plant are more favourable than trucking ore.
Slurry Pipeline Balla Balla to Port Hedland
Transport of concentrate to the port via a slurry pipe has been determined the most economic method. Test work and engineering designs are being undertaken to optimise the slurry pipe and associated equipment to allow initial throughput of 6 Mtpa of concentrate, followed by the planned expansion to 10 Mtpa.
Production water bore installation sufficient for long term sustainable production and conveyance of 6 Mtpa of concentrate through the slurry pipe has been completed, with an excess margin of nearly 30%.
Utah Point Multi-user Port Facility
The Balla Balla iron concentrate will be shipped from the Utah Point berth currently under development by the Port Hedland Port Authority (PHPA). Aurox has secured a 15 year agreement with the PHPA which includes an exclusive area to construct an Aurox owned and operated dewatering facility including concentrate stacker and reclaimer capable of loading ships at 7,500 tonne per hour.
Environmental Approvals Update
Aurox is continuing to progress the environmental approvals process for the Balla Balla project, in consultation with government agencies and key stakeholders. The Project was assigned as an intention for an Environmental Protection Statement (EPS) level of assessment by the Environmental Protection Authority Services Unit (EPASU) on the 21st July 2008. The Company has recently been notified by its environmental consultants to expect final Ministerial Approval in Q1 of 2009.
Balla Balla Ilmenite Potential
Aurox has been investigating the potential to extract a titanium rich concentrate from ilmenite in the magnetite tailings. The intention is to upgrade the weakly magnetic titanium stream via high intensity magnetic and gravity separation, followed by flotation. The proposed ilmenite circuit operating costs will be low, as the feed has previously been ground to liberate the magnetite for iron export. Current results indicate a potential to produce 550,000 tonnes per annum titanium concentrate while at the 6 Mtpa iron concentrate throughput rates, with a rise in production accordingly, as the plant is expanded to 10 Mtpa iron concentrate production. The grade and recoveries of the titanium concentrate are currently undergoing optimisation testwork.
Balla Balla Phosphate Potential
Aurox is progressing studies into the beneficiation of phosphate from its Balla Balla project. Potential processing and sale of a phosphate concentrate could further enhance the already strong Balla Balla project. The phosphate is contained in the hanging-wall waste rock located immediately above the magnetite ore. From the currently available assay and geological information the phosphate mineralisation typically extends to 20 metres above the titanomagnetite ore into the hanging wall waste rock. The apatite bearing material displays grades of between 3% and 7% over this distance and a maiden P2O5 resource estimate has recently been prepared by geological consultants Golder Associates.
Previous beneficiation tests on a composite sample from two core-holes which assayed 4.1% returned a concentrate grade of 30.5% P2O5 and an overall recovery of 67% by a combination of magnetic separation and flotation of the non-magnetic fraction. Concentrate grades of 30 to 32% P2O5 are saleable, with recent prices being in the vicinity of US$430 per tonne (World Bank reported price August 2008). Testwork is currently underway using a similar feed sample to replicate the historical testwork with Amdel Limited. Interim results indicate a similar result is likely. With a strong market for phosphate it is anticipated that Aurox will accelerate the studies for the Phosphate project with a concept to produce up to 1Mtpa of +30% P2O5 concentrate.
BALLA BALLA P2O5 MINERAL RESOURCES AT 19 SEPTEMBER 2008
Western Pit Area--------------------------Class Tonnes P2O5 %--------------------------Measured 34,192,000 3.80Indicated 4,759,000 4.14Inferred 1,846,000 3.94Total 40,797,000 3.85--------------------------Central-East Pit Area--------------------------Class Tonnes P2O5 %--------------------------Measured 38,435,000 3.63Indicated 8,058,000 3.65Inferred 2,403,000 3.98Total 48,896,000 3.65--------------------------Total Balla Balla Mineral Resources--------------------------Class Tonnes P2O5 %--------------------------Measured 72,627,000 3.71Indicated 12,817,000 3.83Inferred 4,249,000 3.96Total 89,693,000 3.74--------------------------
Contact
Charles Schaus
Managing Director
TEL: +61-8-9382-4477
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