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Strike ready to load maiden iron ore shipment at Peru port

ASX-listed Strike Resources’ maiden shipment of high-grade direct shipping ore or “DSO” from its Apurimac project in Peru is now imminent, with a bulk carrier vessel chartered for arrival at the Port of Pisco in about a fortnight. Haulage of iron ore from a nearby port stockpile facility to a dedicated storage area at the Pisco terminal is underway, with loading of 30,000-to-35,000 tonnes of the high-grade premium magnetite ore expected to take four days.

Strike expects the targeted 65 per cent iron product from the Apurimac project to deliver a weighty premium over the 62 per cent iron benchmark price, which is currently at a long-term high around US$215 per tonne. The Perth-based company says that the iron ore will be exported to customers in China, in line with Strike’s primary offtake arrangement with that country’s Good Importing International.

The current lump premium of circa US50c per dry metric tonne unit translates to a whopping additional $US30 per tonne over the current benchmark price. Strike’s freight-on-board or “FOB” costs have been forecast to come in at US$70-$80/tonne.

Following its first shipment, Strike is targeting multiple repeat deliveries with the objective of securing annualised sales in the near term of about 250,000 tonnes from the flagship Apurimac project. The company is continuing to pursue additional crushing and transport capacity to meet its annualised target. It is also planning to expand the fleet of trucks at its disposal to ramp up both the haulage of iron ore to the new crushing facility and for stockpiling of crushed lump DSO close to the port ready for shipment.

Management says it is confident that the current strong demand from Chinese steel mills and premium prices for high-grade lump iron ore present a “clear opportunity” for Strike to churn out significant early-stage cash flows from the Peru operation. The company envisages Apurimac continuing to generate a top-notch lump iron ore product headlined by an impressive “target grade” of about 65 per cent iron. Iron mineralisation consists of predominantly high-grade, coarse-grained magnetite providing comparatively high mass recoveries above 60 per cent at coarse grind sizes higher than 500 microns and with low impurities.

Strike says about 50,000t of high-grade DSO has now been mined from its wholly-owned Apurimac project which has a JORC mineral resource of 269.4 million tonnes including 142.2Mt indicated at 57.8 per cent iron and 127.2Mt inferred at 56.7 per cent.

In addition to the current resource Strike has outlined significant exploration potential, backed by promising recent drill results including 154m grading 62 per cent iron and with extensive undrilled gravity and magnetic anomalies. The Apurimac deposits remain open at depth and along strike.

In an earlier statement Strike Resources Managing Director William Johnson said: “The study being undertaken by (consultancy firm) Ausenco on the 2008 Apurimac project pre-feasibility studies is advancing well with the objective of outlining the world-class potential of a large-scale iron ore mine from the company’s concessions in Peru.”

After Ausenco has completed its review, Strike intends working with the engineering group to finalise the scope for the possible next phase of development.

The two companies will investigate in more detail the capital and operating costs associated with a 15-20Mt per annum operation producing a 68 per cent iron concentrate using a slurry pipeline for product transport to the coast for export.

Strike is also developing the Paulsens iron ore project in the Pilbara district of Western Australia, which has confirmed strong project economics for a 1.5Mtpa production rate over an initial four-year life of mine with direct shipping ore product trucked to Port Hedland for export.

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

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