IRON-NICKEL SCOPING STUDY COMMENCES ON KALGOORLIE NICKEL PROJECT

Transcription

1 ASX Release 26 October 2011 IRON-NICKEL SCOPING STUDY COMMENCES ON KALGOORLIE NICKEL PROJECT INITIAL RESOURCE ESTIMATE COMPLETED AT THE GOONGARRIE SOUTH DEPOSIT AND BENCH-SCALE TESTING COMMENCED SUMMARY Iron-nickel scoping study commences on the Kalgoorlie Nickel Project (KNP) which will investigate the potential production of and market opportunities for an upgraded iron-nickel sinter product based on the Goongarrie South resource and other resources within the larger KNP. The current trend of nickel pig iron and ferro-nickel replacing nickel metal in stainless steel production is set to continue in China which has led to a surge in demand for imported ferruginous lateritic nickel ore. Thermal upgrading of the iron-nickel resources at KNP to produce an iron-nickel sinter product has been identified as having the potential to significantly enhance the economics for direct shipping of unprocessed iron-nickel material. An initial combined iron-nickel resource at the Goongarrie South deposit has been estimated at 48.5Mt at 41% iron and 0.65% nickel. An estimation of other iron-nickel resources elsewhere within the KNP has not yet been completed. On the basis of the Goongarrie South resource, bench-scale metallurgical test-work of an iron-nickel bulk sample has commenced at SGS Lakefield Oretest, in Perth. Heron Resources Limited (ASX:HRR) (Heron) is pleased to announce the completion of an initial Mineral Resource estimate for the Goongarrie South iron-nickel deposit that forms part of Heron's Kalgoorlie Nickel Project (KNP) in Western Australia. The total iron-nickel resource for the Goongarrie South deposit has been estimated at 48.5 million tonnes at 41% iron and 0.65% nickel (refer attached Table 1). On the basis of the Goongarrie South resource, SGS Lakefield Oretest (SGS) in Perth has commenced thermal upgrade bench-scale metallurgical test-work as part of the current Kalgoorlie Iron-Nickel Project Scoping Study. Thermal upgrading of the iron-nickel resource at Goongarrie South to produce an iron-nickel sinter product has been identified as having the potential to add considerable value to the KNP, enhance the project economics and mitigate the market uncertainty for unprocessed direct shipping of iron-nickel material. A reduced iron-nickel sinter product is a higher value product, has improved blending properties and importantly, a dramatically reduced shipping cost, which results in considerable value enhancement over direct shipping of unprocessed lateritic ores. The metallurgical test-work being undertaken by SGS includes: Beneficiation by screening. Reduction roast, at temperatures ranging from 400 to C, with various roast times and reductants. Beneficiation of thermally upgraded products, including High Gradient Magnetic Separation (HGMS), followed by assay and mineralogy of magnetic and non-magnetic fractions.

2 Sonic drill core recovered as part of the Vale Inco KNP Pre-feasibility Study will be used by SGS in the metallurgical test-work. The potential future conversion of the iron-nickel Mineral Resources to Reserves is dependent upon the results and outcome of the bench-scale metallurgical test-work. It is anticipated that the test-work will be completed in the first quarter of Resource Estimation The estimate has been classified as Indicated and Inferred Mineral Resources in accordance with the JORC Code (JORC 2004) and is detailed in Table 1. The resource estimate has been completed by Heron, and has only assessed the Goongarrie South deposit. From Heron s field review of Vale Inco drill areas from the Pre-feasibility Study, ironnickel mineralisation was also confirmed at the Big Four, Siberia North and Highway deposits, but additional drilling is required at these deposits prior to undertaking resource estimation. Iron-nickel resources have been estimated by ordinary kriging into parent blocks with dimensions selected based on the drill hole spacing and analysis of mineralisation continuity (parent block dimensions noted in resource tabulations attached). Ore Types The iron nickel mineralisation is predominantly goethite (hydrated iron oxide), which occurs within the upper nickel laterite profile of the KNP. Heron has subdivided the mineralisation into three readily defined stratigraphic units, from top to bottom being: Ore Type Mineralogy Economic Potential Overburden Ore Reworked goethite, laterite fragments, clastic silica Iron only, minimal nickel High Alumina Goethite, accessory silica, gibbsite, kaolinite Potential feed Low Alumina Goethite, accessory silica, trace gibbsite, kaolinite Optimum feed The test-work program is focussing on the low alumina mineralisation at Goongarrie South. The sonic core selected for bulk sampling has assayed at higher iron and nickel grades than predicted from twinned Reverse Circulation drill holes. The initial bulk sample for testing at SGS assayed 46.3% iron, 1.08% nickel and 5.53% alumina. Potential Flow-sheets The production flow-sheet model to be tested by Heron at SGS will evaluate blending the Goongarrie South goethitic ore with a reductant (coal and oil shale), sintering and partial reduction in a rotary kiln and use of High Gradient Magnetic Separation (HGMS) to recover a magnetic thermally upgraded haematitic product that will also have an enrichment of nickel, cobalt, manganese and chrome. Part of the testing program will evaluate the potential applicability of Heron s Balladonia oil shale as a reductant in the process. The strategy for the Kalgoorlie Iron-Nickel Project is to use a small portion of the much larger KNP resource (727.3 million tonnes at 0.72% nickel and 0.044% cobalt) to commence commercial mining operations. The envisaged flow-sheet has significantly lower capex as opposed to the conventional hydrometallurgical Pressure Acid Leach plant that Vale Inco investigated in the Pre-feasibility Study. Current Constraints on Resource Estimates and Scoping Study It should be noted the current studies are at an early stage and, in particular, definitive metallurgical test-work and capital and operating costs, are not yet available: The current Kalgoorlie Iron-Nickel Project Scoping Study will initially focus on identifying fatal flaws prior to a commitment to a Pre-feasibility Study. 2

3 The assay suite used for the current iron-nickel resource estimation was designed for nickel laterite, and as such several key iron ore elements were not always estimated for all samples (phosphorus, sulphur, silica and calcium oxide). A suite of drill pulps were submitted for the iron ore suite, and phosphorus and sulphur results are at very low levels. Additional assays of KNP pulps for the iron ore suite are required. The KNP has access to excellent infrastructure, including proximity to Kalgoorlie, and access to established gas, road, rail and port infrastructure. The scoping study will also review the transport logistics associated with the Kalgoorlie Iron-Nickel Project. Preliminary marketing studies and financial analysis indicate that the Kalgoorlie Iron-Nickel Project has development potential but considerable preliminary work needs to be completed including metallurgical test-work and flow-sheet development before an assessment of more definitive capital and operating costs is undertaken. Future Program Completion of the current SGS bench-scale metallurgical test-work to confirm a marketable product can be produced from the Goongarrie South goethitic nickel ore. Results are expected in the March 2012 Quarter. Completion of additional market studies which will cover iron and nickel products for the ferronickel, stainless steel and special steel sectors in China. Additional RC drilling and assaying of pulps for the Goongarrie South, Big Four, Siberia and Highway deposits to quantify additional iron-nickel resources. Sonic core drilling to obtain bulk samples from all deposits for quantitative bench-scale test-work. Evaluation of the role of the production of upgraded iron-nickel products within the broader KNP hydrometallurgical nickel-cobalt project. Subject to favourable results from the metallurgical test-work, a financial assessment will be completed which will include an assessment of the capital and operating costs for the project. Jonathan Shellabear Managing Director Heron Resources Limited The information in this report that relates to Mineral Resources for the Goongarrie South prospect is based on information compiled by James Ridley who is a Member of the Australasian Institute of Mining and Metallurgy. James Ridley at the time was a full time employee of Heron Resources Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the resource estimation activity that he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. James Ridley consents to the inclusion in this report of the matters based on his information in the form and context that it appears. Note that Mineral Resources that are not Ore Reserves do not have demonstrated viability. The information in this report that relates to Exploration and data (including drilling data, database quality, geological interpretation and density modelling) is based on information compiled by James Ridley who is a member of Australasian Institute of Mining and Metallurgy. James Ridley at the time was a full time employee of Heron Resources Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the exploration activities undertaken to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. James Ridley consents to the inclusion in this report of the matters based on his information in the form and context that it appears. 3

4 Goongarrie South Deposit Plan view of drillhole collars and iron ore resource envelopes 4

5 mN mN 5

6 Goongarrie South Deposit, which shows low alumina goethite ore on the left, and darker brown Overburden Ore on the right of the photograph. Goongarrie South Deposit, which shows typical mustard yellow low alumina goethite ore in KNP PFS RC chips. Big Four Deposit, which shows mustard yellow low alumina goethite ore on the left, and high alumina ore with chalcedony and magnesite veining on the right. Big Four Deposit, mustard yellow low alumina goethite with brown jasper fragments, amenable to screen beneficiation. Highway Deposit, low alumina goethite ore in KNP PFS RC chips. Note the alluvial ore soil profile, being surficial dark brown haematite fragments. Highway Deposit, typical Alluvial Ore, in this case being surficial cemented dark brown haematite fragments in hard cap. 6

7 Resource Category Indicated Inferred Indicated + Inferred Notes: Table 1 Kalgoorlie Iron-Nickel Project Goongarrie South Deposit October 2011 Ordinary Kriged Grade Estimates for 40mE x 40mN x 2mRL blocks (83%) and 20mE x 20mN x 2mRL blocks (17%) Resources Based on 35% Fe Block Cutoff Grade Ore Type Tonnes Fe% Ni% Co% MgO% Al2O3% SiO2% CaO% Mn% Cr% Overburden 2,673, High Al2O3 7,276, Low Al2O3 19,880, Subtotal 29,830, Overburden 10,759, High Al2O3 1,541, Low Al2O3 6,325, Subtotal 18,627, Overburden 13,433, High Al2O3 8,818, Low Al2O3 26,205, Total 48,457, SiO2% - Due to an absence of SiO2 assay data for approximately 40% of the samples, SiO2% has been estimated by linear regression from the sum of the ordinary kriged estimates for the other grade attributes. Cross checking of block SiO2 estimates against SiO2 assays for nearby samples indicate there can be significant errors in the block SiO2 estimates (up to 20% absolute). CaO% - CaO assay data are also unavailable for approximately 35% of the samples. However, ordinary kriged CaO estimates have been made based on the available data. Note that significant errors can be expected in areas that are poorly informed with CaO assay data.