IMX Resources has signed a legally binding agreement with a second Chinese customer for the sale of phase 1 ore from the Cairn Hill project in South Australia. The agreement covers the iron-copper ore from Cairn Hill that is surplus to the requirements of IMX’s primary Chinese customer.
After discussions with Sichuan Taifeng, which holds the life of mine sales contract for the phase 1 ore, it was decided to maintain capacity at Taifeng’s processing plant in Liaoning province, northeast China, at 1.4-1.5 million tonnes rather than expand capacity to 1.7 million tonnes to match the Cairn Hill output if a second customer could be found to take the excess tonnage.
Taifeng and Termite Resources, which is 51% owned by IMX and 49% by Taifeng, have now signed a term sheet with Juhua Group (Hong Kong), a wholly-owned subsidiary of Juhua Group Corporation. Juhua will purchase 420,000 tonnes in 2011 and then 240,000 tonnes annually for the following three years, and will process the ore through its magnetic separation and flotation facilities in Zhejiang province, eastern China.
IMX’s managing director Duncan McBain says, “This is an excellent outcome for IMX and Sichuan Taifeng. It diversifies the customer base for Cairn Hill and is smart capital management on behalf of Taifeng in respect of processing capacity. It is a win – win situation.”
IMX owns 51% of the Cairn Hill project, 55km south-east of the town of Coober Pedy and close to the Darwin-Adelaide railway. Phase 1 is a unique magnetite iron-copper-gold DSO project. The ore produces a premium coarse grained magnetite product, with a clean saleable copper/gold concentrate.
A phase 2 resource is expected with the aim of an accelerated development program. Phase 2 is a high grade magnetite project where production of a saleable intermediate concentrate using dry magnetic separation is planned.
IMX also owns the iron ore rights on the nearby Mt Woods tenements where besides the potential of phase 3 magnetic anomalies, recent drilling has intersected magnetite to the south and west of Cairn Hill with target mineralization of 320-550 million tonnes @ 25-35% iron based on the drilling, ground gravity and aeromagnetics.
The immediate upside for Cairn Hill/Mt Woods remains the definition of further resources to support a long term iron ore operation annually producing 3-5 million tonnes.
IMX has a joint venture with OZ Minerals for non-iron ore rights on the Mt Woods tenements. OZ Minerals has 51% of the JV and must spend $20 million over five years to retain this interest. OZ Minerals is targeting Prominent Hill style copper/gold mineralization.