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Strike advancing towards iron ore offtake

Strike Resources has taken a crucial step on its path to production with a bulk sample of iron ore from its high-grade Paulsens East hematite deposit in the Pilbara being dispatched to Perth for testing and evaluation. The three-tonne sample will undergo a combination of processing and metallurgical test work to create parcels of ore for evaluation by potential end users.

The test pit excavation and bulk sample extraction are important steps in the advancement of the high grade Paulsens East Iron Ore Project. The excavation clearly highlighted the bands of high-grade hematite iron ore which extend from the top of the ridge to depth and which make up the three kilometre long outcropping ridge. Testwork on the sample material will allow us to optimise our final plant design and the production of Lump and Fines samples, which will be representative of our final products, will be important for concluding agreements with our potential customers.

The Paulsens East project is located on the southern margin of the revered Pilbara region which hosts some of the largest iron ore mines on earth. The project is located 140km west of the mining centre Tom Price, and a mere 8km from Northern Star’s Paulsens gold mine.

The Paulsens East iron ore deposit extends over more than 3km of strike literally sticking out of the ground, a solid 60m above the surrounding terrain. Strike has defined a high-grade hematite resource of 9.6 million tonnes which tips the scales at an impressive grade of 61.1 per cent iron oxide, with 6 per cent silica and 3.6 per cent alumina. At these grades, Strike will soon also be playing the role of auctioneer.

The company’s Scoping Study over the deposit has returned an exciting set of numbers including a surprisingly low CAPEX, at only $8.2 million, and free cash flow of an astonishing $150 million per year over the life of mine – based on a 1.5 million tonne per annum operation.

The company is looking to produce a premium ‘lump’ iron ore, for direct shipping. The operation will utilise conventional open pit mining, with low strip ratios, followed by a coarse crush and screen before being trucked to port.

Strike’s scoping study over Paulsens East was completed in April this year however since that time the economics of the project have been buttressed by a 40 per cent rise in iron ore prices. The scoping study was built around an assumed price of US$85 per tonne for iron ore – at the current price of $120 per tonne, the commercial qualities of the project have become even more compelling.

Strike recently kicked off its Feasibility Study over the project appointing iron ore development specialists Engenium who will also assist with planning the Strike’s path through to production. Engenium has a wealth of experience in iron ore and project delivery through the Pilbara region.

Strike’s Feasibility Study is scheduled to be delivered in the coming months with the company aiming to commence production in early 2021.

With a high-grade hematite deposit in its back pocket, test work underway and samples being prepared for potential buyers, Strike appears to be on the brink of joining the ranks of WA’s prestigious iron ore producers.

Is your ASX listed company doing something interesting? Contact: matt.birney@wanews.com.au

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