Published: July 04, 2011
Unchimé Iron Project, Argentina
LONDON - (BUSINESS WIRE) - ECR Minerals plc is pleased to announce that the Company has secured an
exclusive option to acquire an ownership interest of up to 80% in the
Unchime iron ore project in Salta Province, Argentina. The acquisition
is subject to due diligence.
Highlights
-
Unchime is a haematite deposit with historic indicated resources of
23.5Mt and historic inferred resources of 372.8Mt across multiple
zones with reported grades of 35-45% Fe.
-
11,000 hectare tenement package; railway within 3km of project area.
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ECR can acquire an initial 70% interest in Unchime for staged cash
payments totalling US$2 million and a further 10% interest for US$10
million payable in either cash or shares. An additional payment is due
on estimation of a JORC/NI43-101 reserve exceeding 30Mt.
-
Due diligence has commenced and will include metallurgical testwork
and a limited drilling programme.
Unchime Project
The Unchime project is located 35km from the city of General Guemes and
80km from the city of Salta, which has a population of approximately
500,000. The project comprises approximately 11,000 hectares of granted
mining and exploration concessions plus applications for additional
tenements.
The Unchime deposit is a Clinton style oolitic haematite iron ore
deposit discovered in the 1940s. The deposit was exploited on a small
scale during the 1950s and 1960s. The project area is characterised by a
series of discrete hilltop orebodies overlain by varying thicknesses of
overburden and separated by deep valleys. The iron bearing formation
occurs as near horizontal layers within the hills. The project area is
wooded and the agricultural value of the land is low. Salta Province is
located on the tropic of Capricorn, and climatically receives both
tropical and temperate influences.
There is a Chinese controlled project currently underway 60km to the
north of Unchime to develop an iron ore mine on the same iron bearing
geological formations.
Historic Exploration
Unchime has historic (1965-72) indicated resources of 23.5Mt and
historic inferred resources of 372.8Mt estimated across numerous zones
reportedly grading 35-45% Fe. These historic estimates are based largely
on trench sampling data and are not compliant with JORC, NI43-101 or
equivalent standards.
Metallurgical test work carried out in the same period indicated that an
iron ore product containing more than 52% Fe was obtainable from Unchime
ore by dense media concentration. The Unchime ore is metallurgically
complex and will require detailed testwork to define an optimum process
route and identify the saleable product most likely to be profitable.
ECR's technical personnel consider that the overall resource potential
of the Unchime project may be significantly larger than indicated by
historic resource estimates.
It is believed based on historic metallurgical testwork that the
phosphorous content of the ore as indicated by historic data
(approximately 0.4%) could be reduced by means of a hydrochloric acid
wash. Levels of other common impurities are not believed to pose a
problem, and phosphorus mitigation might not be necessary if the Unchime
ore were to be blended with low phosphorous ore by an end user.
Mining
Due to the flat dipping nature of the Unchime ore bodies it is
anticipated that the project may be developed by open cast mining, with
ore mined as an advancing strip and the waste material ahead of the
operating ore bench immediately returned to the void left by removal of
the ore. The topography of the area lends itself to this potentially
highly efficient and economic method of mining.
Local Infrastructure
Access to Unchime is via paved highway from Salta and unpaved local
roads to the entrance of the project area. There are numerous disused
internal roads and tracks requiring rehabilitation.
A railway line of the Belgrano Carga railway network, which is in the
process of being upgraded by the Argentine government, passes within 3km
of the Unchime project area and a natural gas pipeline passes within
5km. There are 2 substantial power plants with associated electrical
distribution networks within 20km. Water is available in quantity from
local rivers.
The availability of local natural gas is positive with respect to the
energy requirements of any eventual mining operation. ECR will also
assess the possibility of producing pig iron in Salta as an alternative
to the sale of concentrate or direct shipping iron ore. Pig iron
production would be more energy and capital intensive but may deliver
superior economics by producing a high purity iron product highly
marketable for steelmaking.
Argentina presently produces over 6 million tonnes of steel per annum,
importing all raw material requirements. Imported iron ore reaches the
Argentine port of Rosario from Brazil after transport by rail and river
barge and transhipment through Paraguay.
Indicative rail transport costs from the Unchime project to Rosario
1,100km southeast of Unchime are estimated to be in the order of
US$20-30 per tonne. The port of Rosario (Argentina's largest) can
receive large bulk carriers and has direct loading facilities.
Consultants
The Company has appointed the following consultants to assist with the
evaluation and development of Unchime:
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Turgis Consulting, an international mineral engineering consultancy
with extensive experience in the iron ore sector.
-
N H Cole & Associates Pty Ltd, being Neil Cole, an independent
Australian consultant with considerable iron ore experience.
-
Local geologists with prior knowledge of the project area.
Plan of Assessment
Following receipt of the necessary government permission (expected
within the next month), ECR intends to complete an initial diamond
drilling programme in order to provide essential information on the iron
bearing formation in section XII of the Hornitos zone of the Unchime
project. This area has been selected based on historic data, ease of
access and the shallow nature of the drill holes required.
The drilling will seek to confirm the extent and grade of the Hornitos
zone, which has a historic indicated resource estimate of 23.5Mt. To
date limited sampling carried out by ECR geologists has broadly
confirmed the grade of the iron horizons of the zone.
Initial metallurgical test work on ore from Unchime is presently being
carried out on behalf of ECR by AML, a laboratory in Perth, Western
Australia specialising in the metallurgy of mineral sand and iron ore
deposits. Successful testwork indicating that ore from Unchime can be
processed to yield a marketable iron ore product would add substantial
value to the project, and this work is being pursued as a high priority
as part of ECR's due diligence.
Turgis Consulting Review
ECR commissioned Turgis Consulting to undertake a review of available
historic data for Unchime as well as a site visit as part of the
Company's initial due diligence.
Turgis reported that:
"The exploration done thus far indicates that the Unchime Resource
Estimate of 400 million tonnes (approximate) is conservative but remains
to be properly defined.
Ø Turgis is satisfied that the Unchime Project has sufficient potential
to warrant additional exploration and recommends that ECR continues the
current trench verification programme and progresses the proposed
drilling project.
Ø Turgis is satisfied that there is suitable infrastructure in place to
operate the proposed Unchime Mine.
Ø The ECR Argentina Team is well led, motivated and competent and Turgis
is satisfied that ECR has the capability to progress the Unchime Project
satisfactorily.
Ø The "Belgrano Cargo" national railway modernisation programme will
provide more than sufficient capacity for transporting the ore to port
for export.
Ø Should the indicated orebody configuration in Unchime Hornitos zone
section XII prove to be correct, mining will be simple and relatively
cheap.
Ø The environmental impact of mining could be mitigated by concurrent
mining, backfilling and rehabilitation. This could preclude the
necessity for a tailings dam and large waste dumps.
Ø The land in the mining area has low agricultural value.
Ø The Provincial Administration of Salta is pro-mining."
Terms of Acquisition
-
ECR can purchase a 70% interest in the Unchime project for staged cash
payments totalling US$2 million; this interest can be increased to 80%
for an additional payment of US$10 million in cash or shares (mode of
payment at vendors' election). ECR holds the right of first refusal
with respect to the remainder of the project.
-
Of these payments, US$200,000 has been paid as an option fee, US$1.3
million is due 60 days from the date on which permission for the
initial drilling programme described above is granted by the Argentine
authorities, and a further US$500,000 is due not more than 9 months
from the date of the US$1.3 million payment. Once the payments
totalling US$2 million have been made ECR would receive 70% ownership
of the project. The vendors may at their discretion grant an extension
of 30 days to the 60-day period.
-
ECR may continue with its due diligence until the time at which the
US$1.3 million payment is made. Prior to that time, ECR is under no
obligation to proceed with the Unchime acquisition. It is expected
that the permit to drill will be granted shortly, and the drilling
programme will form a key part of the Company's due diligence.
-
If the acquisition proceeds, ECR is required to complete a bankable
feasibility study (BFS) for the project as sole funder; the vendors of
the project are required to provide pro rata funding from completion
of a BFS or suffer dilution. ECR has sole management control until
completion of a BFS.
-
Estimation of a JORC/NI43-101 reserve at Unchime exceeding 360 million
tonnes triggers a payment of US$20 million to the vendors; estimation
of a JORC/NI43-101 reserve less than 360 million tonnes but greater
than 30 million tonnes triggers a payment of US$0.05 per metric tonne.
These payments can be made in cash or shares (mode of payment at
vendors' election).
-
Should the vendors be diluted to an interest of less than 5%, their
interest converts to a 2% net royalty.
-
ECR can transfer any and all of its rights in respect of the project.
-
The above represent binding heads of terms; definitive terms are to be
agreed.
Patrick Harford, Managing Director of ECR Minerals plc, comments:
"We are very excited by the possibility that with further work, the
Unchime project may have the potential to become a major iron ore mine,
perhaps by way of a staged development process. It may be feasible to
develop a relatively small initial operation to supply the local market,
with a larger export operation being developed at a later stage.
Oolitic iron ore deposits such as Unchime represent considerable
metallurgical challenges. However the development of such deposits has
been shown to be technically and commercially feasible elsewhere and the
development of the Zapla project to the north of Unchime by Chinese
investors gives us considerable encouragement.
Should the results of the planned drilling programme and ongoing
metallurgical testwork prove encouraging the Company intends to move
rapidly to complete the acquisition of Unchime and to further define the
extent of iron mineralisation at the project whilst commencing the
feasibility studies necessary to define its commercial merit.
ECR has been able to agree favourable terms for the acquisition of
Unchime with the local vendors, who will become ECR's partners in the
project and who have prior experience of successful bulk mineral
production in Argentina. This partnership will add a valuable extra
dimension to the venture, and discussions with the provincial government
in Salta have indicated that development of Unchime would enjoy strong
local support."
About ECR Minerals plc
ECR is a mineral development company with interests in the USA,
Argentina, Indonesia, Thailand and Australia.
ECR Minerals plc
Michael Silver, Chairman
Patrick Harford,
Managing Director
Stephen Clayson, Director
+44 (0)20 7929 1010
info@ecrminerals.com
www.ecrminerals.com
or
Daniel
Stewart & Company plc
Oliver Rigby/Tessa Smith
+44 (0)20
7776 6550
or
Old Park Lane Capital plc
Michael Parnes,
+44 (0)20 7493 8188
or
Blythe Weigh Communications
Ana
Ribeiro, +44 (0)20 7138 3204
or
Barry Kaplan Associates
Larry
Kaplan, +1 732 747 0702
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