PERTH (miningweekly.com) – A scoping study into dual-listed IMX Resources' Mt Woods magnetite project, in South Australia, has found that a capital investment of some A$294.6-million would be required for a 2.5-million-ton-a-year operation.

The scoping study predicted that the project would have a 25-year mine life, and would deliver a net present value of A$289-million and an internal rate of return of 21%.

“We believe the Mt Woods project is a unique opportunity in the Australian magnetite industry, as the infrastructure required to develop the project is already in place and being used by IMX’s Cairn Hill mine,” said MD Neil Meadows.

He noted that as a consequence, and unlike most predevelopment and current Australian magnetite projects, the Mt Woods operation did not require large-scale capital investment, and was not reliant on third parties for new infrastructure in order to develop a potentially economically viable project.

“The existing rail and port infrastructure, along with the availability of grid power at Prominent Hill, which would be reticulated to the project site at modest capital costs, provides the backbone of the key infrastructure,” said Meadows.

“These factors, combined with the relatively coarse grind size producing a high-grade magnetite concentrate, have resulted in a capital intensity that is an order of magnitude lower than that typically associated with magnetite projects.”

Meadows explained that this allowed for a smaller-scale project to be developed cost effectively, while maintaining optionality for a larger-scale development.

The miner said that the 2.5-million-ton-a-year development option was chosen, as it balanced capital expenditure with the ability to finance, given current market conditions and the company’s market capitalisation, while presenting a project that did not require third-party investment.

The production rate also presented the maximum rail capacity to Port Adelaide from Mt Woods using the container-based system, existing train paths and maximum possible train length on the rail line.

IMX said on Tuesday that the scoping study would now be used to support the partnering process with Azure Capital, which was assessing development options for the project.

Production from Mt Woods is expected to start in 2016, following the completion of a more detailed evaluation and financing. Development plans and a development decision will be finalised once a review of strategic commercial options had been completed.