TORONTO (miningweekly.com) – Iron-ore producers continued to batten down the hatches on low-cost oversupply, an overhang in steel inventories and, at the macro level, weakened Chinese manufacturing data.
Many medium- or small-scale iron-ore projects had also been mothballed, shuttered or divested, while few commentators had been positive about the commodity’s immediate price prospects.
In the iron -ore development space, only projects deemed to have a premium product or the potential for the lowest of operating costs had retained the market’s interest. Even then, the pace of development slowed as companies tried to strike the right balance between necessary advances versus the need to make strategic savings.
One such company, Iberian Minerals, had been illustrative of being able to move forward despite the strong headwinds.
GETTING GOOD GRADE
The company’s Cehegin project comprised a past-producing iron-ore mine and was located in Murcia, south-eastern Spain. It was composed of 62 concessions for just over 1 000 ha, and came with 38 000 m of borehole results and a wealth of historical production data stretching from the 1960s to the 1980s.
The mine averaged grades of more than 65% iron (Fe) until 1985, which meant its material could carry a premium over 62% Fe fines. The material was also noted for a reduced level of impurities. The quality of Cehegin’s potential output would be its critical selling point, Iberian head of corporate development and interim CFO Rick Gliege told Mining Weekly Online. “The abundance of cheap material between 56% Fe and 62% Fe shouldn’t displace the premium grade that Cehegin is capable of producing,” he noted. “High-grade material still has demand attached to it.”
The demand related to high-grade grade iron-ore’s added efficiency in the steelmaking process and that it was often used as a mix to improve the quality of low-grade feed.
Fewer impurities meant fewer pollutants emitted from the blast furnaces. This was an important consideration for the European market, which continued to witness reduced or capped emissions levels on heavy industry, including steelmaking. By comparison, China had just started its journey towards emissions reductions and greater demand for high-grade iron-ore might stem from this.
A National Resource 43-101 technical report for Cehegin was filed in May 2014, which noted the historical data supported estimated mineralisation of between 25-million and 30-million tonnes. In addition, it noted the project’s logistical strengths, including a deep seaport located 115 km away, a nearby toll-free highway, and a railhead just 12 km away that could connect the project to the wider European network.
A big coup for Iberian came in 2013 when Cehegin caught the attention of mining multinational and trading house Glencore, which entered into a co-operative agreement with the company in October 2013. This evolved into a definitive joint venture (JV) that was announced in June 2014, with an 80-20 spilt between Iberian and Glencore respectively.
That JV was still in effect, although Gliege noted that Iberian had sufficient funds to complete the company’s upcoming work programme without a 20% contribution from Glencore. He added that Iberian had entered into discussions to acquire 100% of the project while, at the same time, maintaining the offtake deal with Glencore. “There are huge advantages of having Glencore on board – there’s no question of that,” Gliege said. “We won’t have to concern ourselves with the sale of production as the agreement calls for Glencore to purchase all iron-ore production that meets [its] specifications.”
Cehegin was still in its first phase of development, with a high-resolution aerial magnetic survey across the concessions just completed. The objective had been to confirm and define the extent of several previously compiled targets. “The aerial magnetic survey provided excellent resolution for the showing of near-surface magnetic sources and represents a major improvement over the previous aerial magnetic data we had,” Gliege said.
Another objective would be to bring magnetic anomalies noted outside Iberian’s concessions under the company’s auspices, with Gliege saying this could increase the project’s territory to about 6 900 ha. The aerial magnetic survey would be used as supporting data in applications for exploration permits.
In the meantime, the company would utilise the magnetic data alongside its other modelling to select drill targets for the upcoming 2015 work programme. This would involve around 15 to 18 boreholes for about 2 200 m, with around two holes at each location.
Phase 2 would take the project into the prefeasibility stage during 2016, whereby another 10 000 m of drilling would be undertaken with the goal of outlining an initial mineral resource. The cost was estimated at $2-million and would also involve metallurgical studies, as well as mine and processing plant design work. GOING FOR GOLD
Away from Cehegin, Iberian recently acquired the Caurio project, located within the Rio Narcea Gold Belt in Asturias, northern Spain. This was a region with a gold mining heritage stretching back to Roman times. The Caurio project covered 3,413 ha and was located near Orvana Mineral’s Oro Valle/El Valle gold mine.
Like Cehegin, the company inherited a wealth of historical data, including 9,000 m of core available for analysis and information from historic geological logs and airborne surveys. The company’s near-term objectives at Caurio would be to determine short- and medium-term targets for exploration.
The project came with a three-year option agreement for Iberian, granting it flexibility for the future. “We’re excited about the project,” Gliege said. “And we like gold: it’s a commodity closely followed by many in the resource investment community. It’s a commodity everyone understands – it’s the go-to metal.”
Iberian was also bullish about Europe’s economic performance, which, away from Greece, had undergone a slow but steady recovery. This included Spain. “Spain is on the road to economic recovery and is now ranked the fourth-best performing country within the EU. Its growth rate is currently 3.1%,” Gliege said. “The local and national governments have been supportive and it’s a great jurisdiction in which to conduct exploration.”
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