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Monday 31 March 2014

Special Edition 77

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IMX extends South Australian iron ore operations

Cairn Hill extension forms part of a strategy to establish a 5-year mine life

IMX Resources has announced that it is set to extend operations at its 51% owned Cairn Hill Iron Ore Mine near Coober Pedy, with the Cairn Hill joint venture partners approving a Phase 2 extension through to mid-2015.
• Extends Cairn Hill Mine to mid-2015.
• Financial modelling indicates that together with Phase 1 operations, the Phase 2 extension is expected to generate post-tax, free cash flow of approximately $13.3 million for the Cairn Hill JV.
• Utilises existing operational capability and logistics infrastructure.
• Enables IMX to maintain its existing rail and port access.
• Paves the way for other growth opportunities, including further extensions to Cairn Hill operations, exploration for DSO hematite and synergies with other projects and resources.
IMX’s Acting Managing Director, John Nitschke, said that Phase 2 was a logical, low-risk extension of the Cairn Hill Mine which made sound economic sense, as it built on the current mining operation and infrastructure that is already in place.
The Phase 2 extension will initially comprise the mining of two new open pits (Pits 3 and 4) located to the east of the current Pit 1, with production of over one million tonnes of product. There is potential to further extend the life of the Cairn Hill Mine with a cut-back to the existing Pit 2.
Initial production from Pit 3, located immediately to the east of the current Pit 1, will be crushed and shipped as a Direct Shipping Ore. The balance of Phase 2 material requires crushing to 8mm and dry magnetic separation to produce an intermediate product grading approximately 57% Fe.
The existing crushing circuit will be upgraded with the addition of two tertiary crushing and screening units and a low intensity magnetic separation plant installed. The additional crushers will be provided by the Cairn Hill mining contractor, Exact Mining Services, as an extension to their existing mining contract. The cost of the magnetic separation plant, including installation and commissioning, is $2.1 million and will be partly funded by an equipment finance facility provided to the Cairn Hill joint venture, with the balance funded out of operating cash flow.
Cairn Hill magnetite is especially coarse and existing customers have been able to produce very high-grade magnetite concentrates which are highly desirable as feed to the iron-making process. This makes the intermediate product from Phase 2 particularly attractive to existing customers, one of which has provided a letter of intent to purchase up to 100% of the Phase 2 product under an agreed pricing model based on the 62% Platts Iron Ore index.
Financial modelling to generate post-tax, free cash flow of approximately $13.3 million has been based on Consensus Economics forecasts for the first half of 2015 of US$115.50 per tonne for the 62% Platts Iron Ore index and an AUD/USD exchange rate of 0.86 respectively. Using the average 62% Platts Iron Ore index and AUD/USD exchange rate for the second half of 2013, Cairn Hill generates post-tax, free cash flow of approximately $20.6 million.
Mr Nitschke further added “The progression to a Phase 2 mining operation at Cairn Hill represents a logical step for the joint venture partners to extract maximum value from the substantial mining and logistical infrastructure already in place,” he said.
“We would like to thank our customers, key contractors and service providers for the support we have received, which has enabled this extension to what is already a highly successful operation at Cairn Hill.” Mr Nitschke said the Phase 2 extension formed part of a broader strategic vision to extend the life of the Cairn Hill Mine.
“Our immediate target is to establish a five year life at the Cairn Hill operation, based on our existing rail and port access in South Australia. Phase 2 is the first step, with other opportunities under consideration including a cut-back of Pit 2 to access additional remnant material. We expect to be able to utilise the new processing capacity to upgrade other higher grade portions of our large magnetite rich endowment that may be amenable to this process” he said.
“The Phase 2 extension will also give us more time for success with the exploration program currently underway on the Mt Woods tenements aimed at identifying direct shipping grade hematite that can be exploited using the existing Cairn Hill infrastructure,” he said.

MAYORS REPORT - March 2014
Mayor Steve Baines
By the time of the Council meeting the state election will be over and we will know who will be governing the state for the next four years. It has been extremely interesting to be in a seat that for this election is considered by both major parties to be marginal. We must now build relationships with our new local member and whichever party is in government in an endeavour to maximise the benefits to our town and region.
The requirement to widen the runway due to a change in CASA regulations is still the contentious issue with funding still being sought from the Federal government. Council has once again partnered with Regional Express and many media interviews have been conducted by both Warrick Lodge and myself, as well as lobbying and writing to both Federal and State members. I am confident that both a short term and long term solution will be forthcoming that will allow the REX SAAB340 and other larger aircraft to continue using the Coober Pedy airport.
I have written to the Crown Solicitors Office requesting information about the status of Native Title negotiations over the local government area of Coober Pedy. It is our understanding that Council's part in the negotiations have been finalised and the parties are now waiting on an acceptable Indigenous Land Use Agreement being formulated by the Crown Solicitors office. I have asked for specific information regarding the anticipated date for an ILUA and our resident’s ability to freehold once the ILUA has been signed. At the time of writing no reply has been received.
The commitment by both major political parties to reduce both commercial and residential electricity tariffs has the potential to save our businesses and residents many hundreds of thousands of dollars a year. I am hopeful that the majority of these savings particularly from the business sector will be reinvested within our community in the form of employment and investment that will see a revitalisation of business activity within the town and region. The new tariffs will take effect on the 1st July this year.

Moved to Coober Pedy?
It is opportune at this time of the year to remind newcomers to our town and region that there is one more thing that you need to do. Update your electoral enrolment. Christmas and New Year is traditionally the time when people move to our town, and electoral enrolment is something that is easily overlooked. Enrolment forms are available from your local Post Office, District Council, AEC website, or by phoning 13 23 26.
Many of the services provided to the town, including Council funding, is population based. By updating your electoral role details to reflect that you now live in Coober Pedy, we can all enjoy better services and infrastructure. So change your electoral enrolment details now while you remember, and welcome to Coober Pedy.

District Council of Coober Pedy
Meeting of Electors
Pursuant to Section 93 of the Local Government Act 1999 the District Council of Coober Pedy hereby advises that it will hold a meeting of Electors to be held on Wednesday 16th April 2014 in the Greek Hall, St Nicholas Street, Coober Pedy commencing at 7pm.
The nature of the business to be transacted at the meeting is “Does the community support the construction of a Homelessness Support Service (aka Transitional Accommodation Centre) in Coober Pedy?”.
The following persons are entitled to attend and vote at the meeting of electors:
- any person who is enrolled on the voters roll for the area as an elector, and
- a nominee of a body corporate or group which has its name on the voters roll for the area.
Any enquiries in regards to the meeting can be directed to the District Council of Coober Pedy Administration Centre, Hutchison St, Coober Pedy ph 86724600.
Phil Cameron
Chief Executive Officer

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