Project history

The Pilbara iron ore project commenced in May 2003 as a joint venture between Flinders Diamonds Limited (now Flinders Mines Limited) and Prenti Exploration Pty Ltd.

In March of 2005, Flinders Mines and Prenti agreed with Fortescue Metals Group (FMG) to swap commodity rights on some of the Pilbara project tenements with FMG taking iron ore rights. One tenement, E47/882 (Blacksmith), was not included in this deal and Flinders Mines retains 100% ownership.

In May 2007 it was decided to investigate the iron ore potential of E47/882. 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, FMS purchased tenement E47/1560 (now known as Anvil) from Cazaly Iron Pty Ltd.

A maiden Inferred Resource of 476Mt at 55.4% Fe was announced on 1 April 2009.

Further drilling in the 2009 campaign extended this resource to 511Mt @ 55.4% Fe, as announced in August 2009

In April 2010, the Company’s announced its first Indicated Resource estimate at the Delta deposit of 157Mt at 56.5% Fe and gave a new Global Indicated and Inferred Resource of 550 million tonnes at 55.6% iron.

In May 2010, the Global Indicated and Inferred Resource was increased by 20% to 658 milllion tonnes at 55.4% iron.

The Global Resource was again increased, in October 2010, to 740 million tonnes at 55.4% iron. The Indicated Resource had a 74% increase to 273 million tonnes at 56.2% iron.

In December 2010, WorleyParsons submitted their final Prefeasibility Study to Flinders Mines. The report confirmed the Pilbara Iron Ore Project to be a long life, large scale mining operation that is both technically feasible and economically viable. A 20-year mine life, with low operating costs, can be sustained, producing up to 15 million tonnes per year.

Regional location of the Pilbara Iron Ore Project showing infrastructure

Iron ore resources near Flinders' tenure

Geology and mineralisation

Outcropping geology in E47/882 comprises the Brockman Iron Formation, which is known to host large bedded iron deposits (BID) in other regions of the Hamersley Ranges. Incised into this bedrock geology are large channel systems, which can hold significant tonnages of channel (or detrital) iron deposits (CID). Formed by cyclic weathering and erosion of banded iron formation, these channels may host accumulations of iron-rich gravels distal from any obvious hard-rock iron mineralisation. These deposits represent excellent economic targets as they are near surface and easy to mine.

The hematite-rich CID ore includes all mineralisation that has been deposited in channels from the surrounding banded iron formation, and is primarily composed of detrital material of either pisolithic or fragmental types. The BID ore is generally located beneath the CID deposits in the underlying Dales Gorge Member of the Brockman Iron Formation, and is more prevalent in the margins and in the headwaters.

BID is characterised by an iron content greater than 60%. Silica and alumina levels are typically low and vary depending on whether the mineralisation is derived from the Joffre or the Dales Gorge Member; the latter having higher shale content contributing to higher silica and alumina levels. Loss on ignition (LOI) is at moderately high levels (~6–9%), which is consistent with predominant goethite mineralisation.

The discovery of BID mineralisation at the Pilbara project is of importance since it represents the possibility of a blendable direct shipping ore material with elevated iron grades and low deleterious elements. BID mineralisation remains open at various locations on margins of the channels in all five deposits, and detailed geological mapping and further interpretation of the drilling data is currently being undertaken to determine controls on the BID mineralisation.

Ore genesis model

Drilling campaign

Drilling on the project commenced in July of 2008 and the maiden Inferred Resource of 476Mt at 55.4% Fe was announced on 1 April 2009.

Further drilling in the 2009 campaign extended this resource to 511Mt @ 55.4% Fe.This Inferred Resource estimate was based on the results of 301 reverse circulation (RC) drillholes in Blackjack, Champion, Delta and Eagle exploration areas for a total of 15,038m drilled between August and December 2008. Drilling was completed to JORC compliant Inferred Resource status with drill spacing of 500m by 200m, and infill to 500m by 100m in the narrow headwaters and the margins of the channels.

Flinders Mines commenced its 2009 drilling campaign on 23 May. To the end of July 2009, a further 174 RC drillholes were completed for 6,978m. The majority of these holes were drilled at Ajax targeting both CID and BID mineralisation. Additional drilling was carried out at Blackjack, Champion, Delta and Eagle, targeting extensions of BID mineralisation.

As of November 2009, a total of 872 holes for 41,125 metres have been drilled at Flinders Mines’ Blacksmith and Anvil tenements.

Total 2010 drilling at the project saw 725 drillholes completed for 36,443 metres.

As of 31 December 2010 there has been 1,800 drillholes completed for 89,632 metres since the project commenced in July 2008.

2011 Drilling strategy

Planning has been completed for the 2011 drilling programs, which commenced late in February 2011. Two RC rigs will initially focus on a drill-out of the Delta deposit, to convert current Indicated Resource to Measured Resource status. Additional drilling will also be carried out on the recently intersected BID mineralisation on the valley flanks of Delta and assessing additional targets in this area.

One diamond core rig will be dedicated to a separate program aimed at sourcing additional material for ongoing geometallurgical testwork.

Development

2009 saw Flinders Mines declare its maiden Inferred Resource on the Pilbara Iron Ore Project and undertake a Scoping study (completed in July of that year) to determine whether the development of an economic iron ore mine was possible.

In December 2009, as a consequence of the results of the Scoping Study being favourable, WorleyParsons Limited — internationally renowned for its expertise in the resources and energy sectors, and specifically for its iron ore experience — was awarded the contract to manage a Prefeasibility Study.

WorleyParsons submitted the completed Prefeasiblilty Study to FMS in December 2010, the results of which the Company announced to the ASX, on 18 January 2011.

Project Timeline

By its nature, the definition of the Project timeline is somewhat conceptual. As further resource drilling (RC) defines the deposits, and metallurgical testwork assists us in understanding the metallurgical characteristics of the ore, the timeline for the project will become more definite.

Conceptual project timeline