Western Australia Iron Ore

The Company has entered into an agreement to acquire 100% of Zanthus. Zanthus holds seven contiguous granted exploration tenements and two granted prospecting licenses in the Pilbara’s iron producing Hamersley Basin. The tenements are adjacent to the North West Coastal Highway and 120 kilometres southwest of Karratha and the Port of Dampier. Established infrastructure traverses the tenements, including the Robe River Railway and the Dampier-Bunbury gas pipeline.  The proposed railway for the Australian Premium Iron (API) Joint Venture is expected to cross through the tenements and continue to the proposed Anketell Port, west of Cape Lambert.

The Archean Hamersley Province of the Pilbara is a major world iron ore province with high grade iron ore mines occurring over an area of 400km by 150 km. Banded iron formation (BIF) is the major source of iron with the sediments of the Hamersley Group containing the bulk of the deposits. Another significant source of iron ore mined in the Pilbara is the Channel Iron Deposit (CID).

The main economic rock units for BIF iron ore in the Hamersley region are the Brockman and Marra Mamba formations. Early stage exploration has mapped abundant outcrop with iron levels greater than 50% in similar stratigraphy to major operating mines.

In 2009 Zanthus commissioned UTS Geophysics to conduct a 25,555km aeromagnetic-radiometric line survey over the tenements, with data compilation and interpretation completed by Southern Geoscience. Both magnetic and radiometric signatures were used to infer lithologies and structures under cover, revealing that Hamersley Group rocks are very likely to exist under shallow cover away from known outcrop.

Brockman and Marra Mamba Formations outcrop over 26 kms and 29 kms of strike respectively with total strike length on the tenements as a result of magnetic imagery estimated at more than 50 kms. No drilling of these units has yet been conducted on the tenements.

CIDs are often found as pods within depressions in ancient palaeochannels and are a cheaply extracted source of high grade iron ore as the resources tend to have low strip ratios, can be dry mined and are conventional direct shipping ore. There are abundant CID operating mines and deposits in proximity to the Zanthus tenements.

Rio Tinto’s Mesa A and Mesa J are both operating CID mines with combined annual production of greater than 30 M tpa whilst undeveloped CID’s in proximity to the Zanthus tenements include Warramboo, Mesa B-F and Mesa H-K, as well as Jewel, Cochrane, Ken’s Bore, Cardo Bore East and Upper Cane.

Publicly listed Red Hill Iron Ore Ltd owns the rights to CID deposits in the western half of one Zanthus tenement (E08/1685, shown on Figure 2) and have to date identified 71M tonnes of ore at 54.1% Fe.  Red Hill have no rights to high grade hematite banded iron formations that may exist on the Zanthus tenements.

Additional CIDs have been mapped in the Eastern section of E08/1685 and potential exists for undiscovered CIDs under shallow cover.

The Leases to be acquired are identified below. Various maps showing the Tenement locations, infrastructure, geology and magnetic are shown in Figures 1 and 2.

Iron ore mining in the Pilbara region currently sees combined production of greater than 400 million tonnes of ore per annum, with numerous operating mines and large scale infrastructure supporting this annual movement.  Ongoing demand has continued to drive intense capital investment in the region with several planned and recently completed projects aiming to expand production rates, such as:

CITIC Pacific Mining is in the final stages of developing the Sino Iron project, 50 kms to the north of the Zanthus tenements. Five billion tonnes of magnetite ore resources have been established. Initial production is expected to be at an annualized 24M tpa, but the Project has the potential to expand to 70M tpa.

Aquila Resources and American Metals and Coal International formed the Australian Premium Iron Joint Venture (API JV) in 2005 with the goal of developing a series of iron ore mines 10 to 60 kilometres to the south of the Zanthus tenements. The proposed mines are integrated with a planned transport network including a 160 km heavy haul railway and new port at Anketell Point. The API JV plans to export 25M tpa or ore with the first shipment planned for 2014.

Fortescue Metals intends to connect their proposed central Pilbara railway to the port at Anketell Point with plans to ship an additional 40 m tpa of ore.

Robe River Iron associates (majority shareholder Rio Tinto) own and operate the Mesa A and Mesa J mines immediately south of the Zanthus tenements and plan to develop the adjacent Warrnambool deposit.

The examples above demonstrate the substantial ore resources in the region and the significant infrastructure and mining services being established.  This will allow any ore resource discovered to be more easily developed with much less capital investment required.

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