With iron ore costs hovering round US$120 per tonne (A$178) Enterprise Minerals is critically contemplating restarting its Riley iron ore mine in Tasmania which has been on care and upkeep since September 2021. On the time of its closure, the worth of iron ore was in free-fall plunging to US$80 per tonne (A$118) in late 2021.
Below the mine’s revival technique, the corporate is investigating fast and cost-effective alternatives to cut back ongoing dangers associated to the volatility of the iron ore worth.
Such methods embrace using its personal employees to function dry-hire cell vegetation for dry display screen beneficiation, limiting costly contractual preparations. The corporate plans on churning out 5 preliminary shipments of ore at low prices.
Enterprise can also be in discussions with Prosperity Metal (PSU) relating to its offtake settlement which is about to run out in September this yr. The corporate is angling to maneuver to a set pricing mechanism from the present floating worth with transport to be transferred from a Value and Freight (CFR) foundation to a Free on Board (FOB) deal.
Below a CFR settlement, Enterprise assumes the better duty for arranging and paying for the transportation of ore from port to port. A FOB deal strikes this price onto PSU as soon as the ore is loaded onto the ship, drastically lowering working capital necessities.
Since inserting its Riley mine on care and upkeep, Enterprise’s storage facility at Burnie has been leased to a 3rd celebration offering a short-term price saving. The present lease ends in June permitting the corporate to take momentary possession of the ability upon restarting the mine.
Enterprise believes implementing a number of key austerity measures will result in a fast restart and scale back each danger and dealing capital necessities.
The corporate’s Riley deposit takes in 1.6 million tons going 57 % iron from floor. It’s positioned in northwest Tasmania, solely 10km from Enterprise’s Mount Lindsay tin-tungsten deposit that incorporates over 80,000 tonnes of tin.
Manufacturing at Riley was scheduled at 800,000 tonnes each year for 2 years with a low impurity haematite product grading 57 per cent iron. It commenced manufacturing with a cargo of 45,632 tonnes of iron ore with a mean grade of 57.three per cent iron earlier than deteriorating market situations led to the suspension of operations.
Goldman Sachs lately upgraded its iron ore worth forecast by 20 per cent to US$120 a tonne from US$100 a tonne in 2023. With an anticipated 43 million tonne deficit of iron ore available in the market spurred on by China’s sooner than anticipated financial reopening, the worldwide funding financial institution has additionally issued a three-month goal of US$150 a tonne in comparison with the spot worth of US$125 a tonne.
If Enterprise can pull by way of with its fast begin technique at its Riley iron mine, the corporate appears set to reap the rewards of a strengthening iron ore worth amid a short-term provide squeeze.
Is your ASX-listed firm doing one thing fascinating? Contact: matt.birney@wanews.com.au
