IronClad mining has signed an option agreement with Sea Transport Corporation to ship iron ore from a holding warehouse at Lucky Bay to a floating harbor, located about 5 to 10 kilometers offshore South Australia. The multi user port and floating harbor will provide an important port outlet and significant cost savings for the Wilcherry Hill JV Iron Ore project.
In a first for the state, a multi user port facility is to be developed near Cowell on South Australia’s Spencer Gulf, which is welcome news for IronClad as it is on the verge of mining iron ore from the Eyre Peninsula.
The Lucky Bay port option will reduce the land transport distance from Wilcherry Hill to ships from 540 kilometers to only 154 kilometers and importantly, the JV expects to reduce operating costs by about USD 20 per tonne, from USD 85 to USD 65 per tonne.
The Wilcherry Hill project is an 80:20 JV between IronClad and its associated company Trafford Resources, and is situated near Kimba on the Eyre Peninsula.
The announcement was made by Mr Ian Finch, IronClad’s executive chairman, at the second day of the Paydirt 2011 South Australian Resources& Energy Investment Conference in Adelaide.
He said that “This is a significant announcement for South Australia’s future bulk shipping needs. It is a win-win situation for everyone, and is a very exciting project for all parties involved. Necessity is the mother of invention, and the establishment of our state of the art floating harbor and Sea Transport’s multi user port facility are testament to what can be achieved when innovative people put their heads together to solve an issue.”
IronClad will use the facility, developed by Sea Transport Corporation, to load cape sized vessels with storage capacity of up to 150,000 tonnes with iron ore from the floating harbor.
Previously, IronClad had announced plans to transport iron ore from the project via road to Whyalla, where it would be loaded onto rail to Port Adelaide, before being transferred to ships.
Under the announcement, the iron ore will be transported by road from Wilcherry Hill to Lucky Bay, where it will be loaded onto a barge to transport the resource to the floating harbor, where it will then be transferred to ships moored at the facility.
The South Australia government supports the multi user harbor as it facilitates approvals for infrastructure projects considered essential to the state’s development and will also strengthen economic growth and employment opportunities in the region.
Sea Transport Corporation is currently preparing a comprehensive development application utilizing key design and environmental impact assessment specialists.
The JV plans to export premium grade Direct Shipping Ore from Wilcherry Hill from late this year, targeting an annual rate of up to two million tonnes a year within two years. Although the Wilcherry Hill project will begin life as a relatively small project by iron ore industry standards, it will be producing a premium grade product and it is planned to expand rapidly in three stages to a total production target over 10 million tonnes of iron ore a year.
The multi user port facility will be developed in two stages. Stage One will operate via a tug and barge system. IronClad has already purchased a tug and construction of the barge will commence soon.
Stage Two will be developed with customized motorized feeder barges, on shore loading facilities and an off shore floating harbor. For the first two years, iron ore will be transported in containers by road to the port and transshipped in feeder barges, still in containers, to iron ore carriers equipped with cranes and dust suppression systems. The containers will be lifted by crane and emptied into the hold.
As the tonnage increases, this system will be replaced with a bulk loading system in which bulk ore will be carried from the land based port to a floating harbor, a floating facility with ore stockpiling space and docking facilities, which will be permanently anchored in water deep enough for 150,00 tonne ore carriers to tie up and load alongside.
On March 25th 2011, IronClad awarded a USD 4.7 million contract for a mine village to be constructed at Kimba, South Australia, to accommodate the workforce for its Wilcherry Hill Iron Ore mine. Four years after its discovery, Wilcherry Hill differentiates itself from other iron ore projects in Australia as it has a relatively low start up capital cost of around USD 26 million.
A robust rate of return and quick pay back is possible at current and projected iron ore prices. Stockbrokers Intersuisse placed a speculative BUY on Ironclad in December 2010.