PILBARA IRON ORE PROJECT (PIOP)

Location and Surrounds

The PIOP is located in the Pilbara region of Western Australia, approximately 60km north-west of the town of Tom Price. The PIOP consists of the Blacksmith and Anvil tenements. The Blacksmith tenement is located between a number of existing and proposed developments. To the north is Rio Tinto’s Caliwingina iron ore resource, to the east is FMG’s Solomon iron ore hub, to the west is FMG’s Eliwana development project and API’s West Pilbara Iron Ore Project and to the south, Rio Tinto’s Brockman 2 operations. The Anvil tenement is located approximately 10km to the south-west of Blacksmith.

History

The PIOP commenced in May 2003 as a joint venture between Flinders Diamonds Limited (now Flinders Mines Limited) and Prenti Exploration Pty Ltd (Prenti). In March 2005, Flinders and Prenti agreed with Fortescue Metals Group (FMG) to swap commodity rights on some of the PIOP tenements, with FMG taking the iron ore rights. One tenement, E47/882 (Blacksmith), was not included in this transaction. It is this tenement in which Flinders has a 100% ownership interest. In May 2007, Flinders decided to investigate the iron ore potential of Blacksmith following the announcement of FMG’s Serenity deposit and Rio Tinto’s Caliwingina deposit.

On 22 November 2007, an exploration target of 325 – 390Mt of iron ore at a grade of 45 – 60% Fe was announced. On 30 June 2008, Flinders purchased tenement E47/1560 (Anvil) from Cazaly Iron Pty Ltd. The first drilling campaign on Blacksmith commenced in August 2008 leading to a maiden Inferred Resource of 476Mt at 55.4% Fe, announced on 1 April 2009.
Further drilling in the 2009 campaign extended this resource to 511Mt at 55.4% Fe, as announced in August 2009. In April 2010, Flinders announced its first Indicated Resource estimate at the Delta deposit of 157Mt at 56.5% Fe and a new global Mineral Resource of 550Mt at 55.6% Fe.The global Mineral Resource was subsequently increased to 748Mt in October 2010 and 917Mt in November 2011.

During the exploration drilling phases Flinders earned a 100% stake in the tenements in the Prenti joint venture, with a residual 5% net royalty payable to Prenti. On 11 November 2011, Flinders announced that the royalty was acquired by Flinders from Prenti for a cash settlement and a 5% net profit production royalty in respect of non-iron ore commodities in the tenements that were the subject of the JVA. As a result, Flinders now has an unencumbered 100% ownership of the iron ore in the PIOP tenure.

Mining Lease M47/1451 (Blacksmith) was granted by the Western Australian Department of Mines and Petroleum on 26 March 2012.

In 2017 a large Geotechnical, hydrological and metallurgical test work programme was completed following a strategic review which identified these as key risks to the projects development. These risks are now better understood and have been mitigated, including:

  • Metallurgical upgrade risk – the base case metallurgical processing parameters for Ore Processing Facility 1(OPF1) and Ore Processing Facility 2 (OPF2) have now been confirmed. These parameters include the detrital ores which have proven to be upgradable to a quality that contributes to an overall blended product.
  • Geotechnical pit slope risk – geotechnical pit slope design angles have been further defined to an improved level of confidence for all deposits across the PIOP. The angles show that previous analysis was conservative and the overall pit slope angles can be steepened.
  • Geohydrological risk – dewatering modelling on a conceptual mine schedule has modified the risk profile from a groundwater oversupply risk to a groundwater undersupply risk. Whilst this risk cannot be retired, it is now a lower overall project risk. Flinders applied for and was issued with a letter from the Department of Water and Environmental Regulation (DWER) which upgraded the water held in reserve by DWER from 5GLpa to 13GLpa.

Following the completion of the 2017 drilling campaign and subsequent metallurgical laboratory analysis, Snowden Mining Industry Consultants (Snowden), on behalf of Flinders Mines Ltd (FMS), re-estimated and updated the Mineral Resource estimate on 1st March 2018.

Mineral Resources

The full PIOP Mineral Resource Estimate Update was released to the ASX on the 1st March 2018 – for comprehensive understanding please refer to the announcement.

PIOP Global Resource Estimate Summary

Small discrepancies may occur due to rounding. Cut Off: Ore types DID1, DID2, DID3 reported using Fe>40% and Al2O3<8%; ore types DID4, CID, BID reported using Fe>50% and Al2O3<6%

Blacksmith (M47/1451) and Anvil Deposits (E47/1560)

Yellow lines show the 10 km UTM grid; blue points = drill hole collars

Competent Person’s Statement – Mineral Resources

The information in this report that relates to the PIOP Mineral Resource estimate is based on information compiled by John Graindorge who is a Chartered Professional (Geology) and a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity to which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. John Graindorge is a full-time employee of Snowden Mining Industry Consultants Pty Ltd and consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.