Name of the Project

Southdown magnetite project.

Location

The project is located 90 km from Albany, in Western Australia’s Great Southern region.

Client

Southdown is a joint venture (JV) between Grange Resources (70%) and SRT Australia (30%), which is jointly owned by the Sojitz Corporation and Kobe Steel.

Project Description

Southdown is an advanced project with more than 1.2-billion tonnes of high-quality mineral resources, including ore reserves of 388-million tonnes.

The project has been designed to produce ten-million tonnes a year of high-grade, quality magnetite concentrate at 69.5% iron over a potential mine life of 14 years.

The May 2012 definitive feasibility (DFS) proposed a pit-to-port operation involving an opencut mine and concentrator, a transmission line for power supply, a desalination plant to supply water needs, slurry and return water pipelines from/to the port, and significant Albany Port expansions.

An alternative development option was studied by the JV partners to a prefeasibility standard (PFS) in 2015. 

This introduces different options for development and reduces initial capital. 

The key changes from the DFS include:

• using contract mining;

• a reduction in the production rate to five-million tonnes a year of concentrate;

• a reduction in the size of the concentrator to one line to match the production rate;

• additional concentrate storage at the mine site to allow for the reduction in footprint at the port; and

• a change to a transshipping methodology to remove the need for extensive dredging and land reclamation.

This alternative case extends the life-of-mine from 14 years to 28 years for the western zone, and more than 50 years for the total resource.

Potential Job Creation

Not stated.

Net Present Value/Internal Rate of Return

The May 2012 DFS confirmed a net present value (NPV), at a 10% discount rate, of more than A$1-billion and an ungeared internal rate of return (IRR) of 16.6%.

The 2015 PFS estimates the NPV of project free cash flow for the 28-year plan at $753-million as at the feasibility study date, generating an IRR of 19.2% a year.

Value

The May 2012 DFS estimated initial capital expenditure at A$2.89-billion, including engineering, procurement and construction, owner’s costs and a contingency of A$535-million.

The optimised development option is expected to deliver reductions in capital spending from an estimated A$2.89-billion to about A$1.4-billion.

Duration

A master schedule has been developed for the PFS, with first ore expected to be shipped 27 months from the final investment decision.

Latest Developments

Most of the environmental permits are in place, with the environment protection and biodiversity conservation for the mine site, the desalination plant, pipelines and ship-loading facilities at the formal assessment phase, having completed the public review period in November 2017.

The bulk of the land required for the project site, slurry and water pipelines has been secured. Aboriginal heritage issues have been successfully addressed, with minor follow-up work in progress.

Key Contracts and Suppliers

None stated.

On Budget and on Time?

Not stated.

Contact Details for Project Information

Grange Resources, tel + 61 8 9841 4255, fax + 61 8 9841 3643 or email info@grangeresources.com.au.