| Mon 12 Mar 2012, 8:55 | | PET - Petmin Limited - Correction of Commercially significant maiden resource |
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PET - Petmin Limited - Correction of Commercially significant maiden resource
statement for Petmin`s iron sands to pig iron project in Canada
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
"Committed to growth, dedicated to value"
JSE code: PET AIM code: PTMN
ISIN: ZAE000076014
("Petmin" or "the Group")
Correction of Commercially significant maiden resource statement for Petmin`s
iron sands to pig iron project in Canada
Petmin has issued a maiden resource statement for its jointly-controlled North
Atlantic Iron Corporation (NAIC) iron sands to pig iron project in Canada`s
Labrador province.
Petmin will now accelerate its investment in NAIC based on the project`s
technical and economic viability.
The iron sands resource provides an abundant low-cost feedstock for production
of a concentrate with in excess of 50% Fe /ton at a cost of under US$30 per ton
for conversion into high-purity pig iron, with a 25 to 30 years life of mine for
Phase 1 production of 500,000 tonnes of pig iron annually.
The resource statement, based on just 3% of NAIC`s 450km2 claim, indicates an
inferred resource of 594 million tonnes of iron sands at 9.35 weight percent (wt
%) heavy minerals of which 38.02% is Fe2O3 equivalent (at a cut off grade of 5%
heavy minerals).
The resource statement is based on the Canadian Institute of Mining, Metallurgy
and Petroleum (CIM) reporting guidelines (Canada`s equivalent of SAMREC/JORC).
Petmin has an earn-in option to acquire 40% of NAIC for a total consideration of
US$25 million, plus a further option to acquire an additional 9.9%. Petmin`s
investment to date is US$3.5 million for its current stake of 10.17% in NAIC.
"We now have independent verification of a very substantial resource suitable
for production of a quality concentrate which becomes a low-cost feedstock for
high-purity pig iron," said Bradley Doig, Petmin director of business
development.
"Our exploration of just a small part of the extensive NAIC claim demonstrates
the potential for NAIC to become a major low cost producer of pig iron."
The NAIC claim in Labrador is close to clean low-cost power and an existing port
seven days from US markets.
Petmin and its partners in NAIC, Grand River Ironsands Incorporated, propose to
produce pig iron for export to the US and other countries.
NAIC has already produced a concentrate of between 55% and 60% iron from which
pig iron has been produced using two different technologies on a batch scale.
During the next six months NAIC will carry out a continuous demonstration scale
smelt test and complete an updated National Instrument (NI) 43 101 compliant
statement.
NAIC has drilled 4,500 metres and analysed more than 1,400 samples.
Exploration to date and the maiden resource statement are based on just 3% of
the NAIC claim, which has been drilled to a depth of 15 metres. Aeromagnetic and
Lidar surveys show potential for the resource to be extended at least to 45
metres.
Exploration/drilling plans for the next six months include step out drilling as
well as larger diameter drilling on the current resource to a depth of 45
meters. This deeper drilling has the potential to triple the size of the
resource on the 3% of the claim currently explored.
Cash costs for Phase 1 are estimated at around US$210 per tonne with an all in
cost (including interest, depreciation and amortisation) of approximately US$260
per tonne. Average pricing over the last 12 months has been >US$500/t free on
board (FOB) Ponta da Madeira - Brazil. At these levels, based on current capital
expenditure and operational expenditure estimates, Phase 1 of the NAIC project
has a net present value of over US$450 million.
Tenova has been appointed and is busy with a conceptual design of the furnace.
An engineering company will be contracted to carry out a similar process on the
concentration plant.
Pig Iron - the commodity
Pig Iron is used as a feedstock into the steel making process. Most pig iron
produced in the world is used in integrated steel mills with merchant pig iron
(pig iron traded on world markets) making up about 70 to 80 million metric tons
of the approximate 1.1 billion tonnes produced globally.
Significant merchant pig iron producers are located in Brazil, Russia and
Ukraine. Brazilian producers are expected to be the most direct competitors to
NAIC due to proximity to the US market.
In December 2011 it was estimated that the median cost of production of the
Brazilian pig iron producers was around US$475 per tonne delivered FOB to New
Orleans (Stemcor).
World Steel Dynamics estimates the world pig iron production requirements to
increase to approximately 1.7 billion tonnes in 2025 from 1.1 billion tonnes in
2011.
Qualified person
The resource estimate was undertaken for Petmin by SRK Consulting Engineers and
Scientists`(SRK) Mark Wanless Pr. Nat. Sci., a geologist with more than 15 years
experience in southern Africa and internationally. His expertise is in due
diligence studies and mineral resource estimation in a range of commodities
including gold, PGEs, base metals, iron and manganese, and mineral sands.
Mark is a Partner and Principal Geologist with SRK, and is registered as a
Professional Natural Scientist with the South African Council for Natural
Scientific Professionals. He is an associate member of the South African
Institute for Mining and Metallurgy.
Mark is a Qualified Person under the definitions of NI43 101.
The resource estimation methodology and results were also reviewed and approved
by Don Hains, P. Geo., Don is a registered Professional Geoscientist in Ontario
and is an independent Qualified Person in terms of NI43 101. Don Hains has also
reviewed and verified the technical information contained in this release.
Don is an independent Professional Geologist who specializes in feasibility and
mineral economics studies related to industrial minerals and resource
development.
Enquiries:
Petmin
Bradley Doig (Director of business development)
+27 11 706 1644
Media
Jonathon Rees
+27 76 185 1827
Sponsor and Corporate Adviser (JSE)
River Group
Andrew Lianos
+27 834 408 365
Nominated Adviser and Broker (AIM)
Macquarie Capital (Europe) Limited
Steve Baldwin
+44 20 3037 2362
Nicholas Harland
+44 20 3037 2369
Johannesburg
12 March 2012
Date: 12/03/2012 08:55:29 Produced by the JSE SENS Department.
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