Industrial Minerals Down Under

Australia’s only industrial minerals newsletter

Enquiries: PO Box 2153, Kambah, ACT 2902, Australia Mob: 0432 776 824 E-mail: website: www.indmins.com.au Number 1/2010, first half of January 2010 (prepared twice a month)

Abbreviations used: ABARE = Australian Bureau of Agricultural & Resource Economics; ABS = Australian Bureau of Statistics; ACCC = Australian Competition & Consumers Commission; AGM = annual general meeting; ASIC = Australian Securities & Investments Commission; ASX = Australian Stock Exchange; BFS = Bankable Feasibility Study; CRC = Cooperative Research Centre; DSO = Direct Shipping Ore; EPA = Environmental Protection Authority; FS = Feasibility study; FIRB = Foreign Investment Review Board ; HM = Heavy Minerals; HoA = Heads of Agreement; IPO = Initial Public Offering; JORC = Joint Ore Reserve Committee; JV = joint venture; km = kilometre; kt = kilo (‘000) tonnes; m = metre; MoU = Memorandum of Understanding; Bt = billion tonnes; Mt = million tonnes; pcp = previous corresponding period; PER = Public Environmental Review; PFS = Pre- Feasibility Study; Q = quarter (of a year); sq = square; t=tonne.

Source abbreviations: CIN = ConstructionEquipmentNews; MN = MiningNews

BAUXITE & ALUMINA Bauxite Resources has signed a HoA with China’s Yankuang Corporation for the joint development and ownership of an alumina refinery, WA. Under the proposed JV agreement, Yankuang will contribute 75% of the costs of the proposed refinery to earn a 50% interest. Bauxite will receive a 25% free carried interest and will fund a further 25% to bring its interest up to 50%. A BFS is required for the proposed refinery with a target of no less than 150 Mt/year. 11/01/2010, MN

Monax Mining has signed an agreement with Delminco to acquire five bauxite exploration permits in the Cape York Peninsula, Qld. Monax will have the rights to explore the 1358 sq km tenements for one year by paying a $50,000 option fee. After a 12-month period, if the company decides to purchase the tenements outright it will make a final payment of $500,000. 12/01/2010, MN

IRON ORE IMX Resources has signed a HoA with Hong Kong-based Taifeng Yuanchuang International Development Company, which will see it pay $23 million for a 50% interest in the Cairn Hill magnetite-copper-gold project, SA. Taifeng will also subscribe for a minimum $24.1 million for a 19.9% stake in IMX. The agreement is subject to due diligence by Taifeng, as well as shareholder and FIRB approval. IMX’s 3-year sales off-take agreement with Jilin Tonghua Iron & Steel Group Mining for up to 1.4 Mt/year of Phase 1 ROM ore will remain, but Taifeng will have first rights to purchase any production from any future developments at the project at the prevailing market price. 4/01/2010, MN

Industrial Minerals Down Under, 1/2010 Page 1 of 7 Ironclad Mining’s metallurgical testwork at its Wilcherry Hill project, SA, has confirmed that the project will be a high-quality, low-cost onsite utilising a simple mobile crushing and screening plant with accompanying low-intensity magnetic separation options. The company has plan a 2 Mt/year DSO operation with first production to begin in the third quarter 2010. It has identified Port Adelaide as the best shipping option, based on costs and environmental issues. Port Adelaide is 450 km from Wilcherry Hill, but around 350 km of the journey will take place on the existing national rail line. Wilcherry Hill has an indicated and inferred resource of 60 Mt of crystalline magnetite grading 30.6% iron. 4/01/2010, MN; 5/01/2010, p 9

Trafford Resources reported that it would take up its entitlement of 2-million shares in IronClad Mining’s $2.6 million rights issue. IronClad would use the funds for the final stages of the FS into the development of the Wilcherry Hill mine. Trafford discovered the Wilcherry Hill deposits after listing in mid-2006 and established IronClad in 2007 to explore, develop and mine the deposits. 6/01/2010, Australian, p 17; Adelaide Advertiser, p 43; 5/01/2010, MN; Mining News Weekly

WA’s Department of Mines and Petroleum has granted Brockman Resources a ML at its Marillana project, after the native title agreements were finalised with the traditional landowners, the Martu Idja Banyjima group and the Nyiyaparli group. The DFS is scheduled to be finished in the third quarter of 2010. Marillana is forecast to produce 17 Mt/year of a 57-62% iron product. 6/01/2010, MN

The International Stainless Steel Forum (ISSF) reported that September 2009 quarter world stainless steel output increased by 12.5% to 7.06 Mt, compared with September quarter 2008. However, global stainless steel production fell to 15% to 17.9 Mt in the nine-month period, compared with 21.07 Mt a year earlier. Excluding China, stainless steel production in Asia was 5 Mt in the first nine months of 2009, a decline of 23%, over same period in 2008 owing to lower output in India and Japan, while production remained flat in Korea and Taiwan. Stainless production in China was 6.6 Mt in the first nine months of 2009, an increase of 19.1% on the same period of 2008 accounting for almost 37% of the world’s stainless production. 6/01/2010, Mining News Weekly

Atlas Iron has not made any decision regarding development of its $3 billion Ridley magnetite deposit, WA, which could produce up to 15 Mt of magnetite from mineral resources of 2.01 Bt at 36.5% magnetite. The company is looking at off-take partners for the Wodgina DSO operation which is expected to begin production early this year at an initial rate of 2 Mt/year, growing to 3.6 Mt/year by late 2010. 8/01/2010, Canberra Times, p 15; 7/01/2010, MN

Mineral Resources reported that would increase the value of its offer for Polaris Metals to 82.1c per share, up from the value of its current offer of 81.5c if it receives more than 90% acceptances for Polaris’s shares. The company currently controls 70.46% of Polaris shares and, 100% of its options.

8/01/2010; Canberra Times, p 15; 7/01/2010, MN

Western Plains Resources and Flinders Ports have entered into a MoU over the interim handling, storage and shiploading of ore from the Peculiar Knob mine, SA. Construction at Peculiar Knob is expected begin in the second half of 2010. Peculiar Knob has a resource of 19 Mt grading 63.7% iron and 0.02% phosphorus. 11/01/2010, MN

Industrial Minerals Down Under, 1/2010 Page 2 of 7 Mount Gibson Iron is to the restart the development at its Extension Hill DSO project, WA, to be completed within 15 months, at a cost of $80 million. The company has announced a life-of-mine agreements with the Shougang Concord International Enterprises Company and APAC Resources for all the production from Extension Hill. It has access and rail haulage agreements for at least 3 Mt/year of production. 12/01/2010, MN; Mining News Weekly

Lion Diversified Holdings Berhad has accepted Mineral Resources’ takeover offer for Polaris Metals taking Mineral Resources’ stake to 95.9%. Mineral Resources will develop the former Polaris’ Yilgarn project which has a DSO resource of 42.6 Mt at 58.6% iron. 12/01/2010, MN

Cazaly Resources PFS for its Parker Range project, WA, indicated that the best development method was a 4 Mt/year fines operation grading 56.6% iron on a contractor-operated basis over a mine life of 5.5 years. The contract operation had an estimated capital cost of $78 million and an expected net present value of $216 million and internal rate of return of 78%. The project has estimated operating costs of $45/t of shipped product, excluding royalties. Kwinana was identified as the preferred port due to its closer proximity and lower capital costs. The project is near Marvel Loch. A DFS is scheduled for completion by the third quarter of 2010 with first production set for the third quarter of 2011. 13/01/2010, MN; Mining News Weekly

Aurox Resources’ scoping study into reusing water from its Balla Balla iron-vanadium-titanium project has shown that the water could provide a low-cost supply to Port Hedland. The proposed Balla Balla operation would pump iron ore concentrate to Utah Point at Port Hedland as slurry via a buried pipeline, where dewatering will occur. The study investigated leaving the minimum 5 GL/year of water at Port Hedland for low-end uses such as dust suppression and equipment wash- down. Production at Balla Balla is set to start in 2012 with phase one targeting production of 6 Mt/year of iron concentrate and 280,000 t/year of titanium concentrate. 13/01/2010, MN

Rio Tinto reported that 2009 global iron ore production totalled a record of over 217 Mt, up 13% on 2008. Its global iron ore output jumped 49% year-on-year for the December quarter while iron ore production from its Pilbara operations was 56 Mt, up 54% on the fourth quarter 2008 but 2% lower than the previous quarter following planned maintenance. 15/01/2010; Canberra Times, p 16; Australian Financial Review, p 42; Brisbane Courier Mail, p 34; 14/01/2010, MN

Iron Ore Holdings reported the following intersections at the Fingers prospect within its Koodaideri South project including 40m at 59.3% iron, 40m at 60.1% iron, 42m at 60% iron, 56m at 59.9% iron and 36m at 60.9% iron. The prospect lies 20 km and 35 km respectively northwest of BHP Billiton’s Yandicoogina and Rio Tinto’s Yandi mining operations. 15/01/2010, Australian, p 16; Canberra Times, p 16; 14/01/2020, MN

Korean steelmaker POSCO, the world’s fourth-largest steel producer, has plans to take up to 15% interest in the Roy Hill project as part of an $US8.3 billion investment strategy that will focus on the Asia-Pacific region. According to reports, POSCO will also purchase 10 Mt/year of iron ore from Roy Hill and pay for dredging in the Port Hedland harbour. The Roy Hill operation, which has a JORC-compliant resource of 1.25-1.5 Bt of iron ore, lies 80 km north of Newman next to FMG’s Cloudbreak project. Production from the Roy Hill project is earmarked for 2014. POSCO has a stake in Murchison Metals. 15/01/2010, Australian, p 15; MN; 13/01/2010, Australian, p 29

Industrial Minerals Down Under, 1/2010 Page 3 of 7 Iron Ore Holdings has released results from the Boundary prospect, part of the Lamb Creek project, WA, which included 38m at 61.8% iron from 26m, 36m at 61.9% iron from 32m and 22m at 61.7% iron from 28m, within the Brockman Iron Formation. 15/01/2010, MN

The South Australian Government has given final approval for the development of the Bungalow magnetite project, on the Eyre Peninsula, SA, jointly owned by Centrex Metal’s and China’s Baotou Iron & Steel. Under the JV agreement, Baotou would pay a total of A$40 million for a 50% undivided interest in the iron-ore rights to the Bungalow deposit. Centrex would undertake the initial exploration and studies, and a JV company would be established to manage the BFS. The magnetite ore is suitable for processing into iron-ore pellets for use in steel production. 15/01/2010, Mining News Weekly

LITHIUM Galaxy Resources has awarded the mining contract for its Mt Cattlin spodumene project near Ravensthorpe to Goldfields-based Orionstone. Galaxy is expecting mining to begin in early April 2010 with the ore stockpiled ahead of plant commissioning in the third quarter of 2010. The Mt Cattlin plant will have a processing rate of 1 Mt/year producing 137,000 t/year of lithium spodumene concentrate over a 15-year mine life. 5/01/2010, MN

The Western Australian Department of Mines and Petroleum has granted Galaxy Resources a 21 year ML for its Mt Cattlin spodumene project covering all the proposed site infrastructure, including the plant, tailings dam and waste dump. The project has proved and probable reserves of 9.28 Mt grading 1.04% lithium oxide and 138 ppm tantalum pentoxide. The pit design contains a further inferred resource of 3.47 Mt at 1.02% lithium oxide and 141 ppm tantalum pentoxide. 15/01/2010, MN

ZIRCON Gunson Resources has completed the DFS on its Coburn Zircon project. The project is expected to have a mine life of 23.5 years and generate total revenue of $2.2 billion based on the sale of final HM product through the port of Geraldton, WA. The company reported that the project is now ready to proceed to the mine development stage; however it continues to look for a minority partner to help fund mine development. 7/01/2010, www.gunson.com

ODDS & SODS Company (Rio Tinto): Rio Tinto Iron & Titanium reported that production in December quarter 2009 fell by 12% compared to Q4 2008 to 325,000 tonnes of titanium feedstock. The decrease was partially attributable to a reduction in RTIT’s share of RBM from 50% to 37% in December following the conclusion of the Broad Based Black Economic Empowerment transaction. Feedstock production in 2009 was reported to be 1.147 Mt, 25% lower than 2008 production levels. 14/01/2010, www.riotinto.com

General: The seasonally adjusted estimate for the value of total building approved rose 24.6% in November. The seasonally adjusted estimate for the value of new residential building approved rose 2.2% while the value of approved residential alterations and additions fell 1.4%. The seasonally adjusted estimate for the value of non-residential building rose 52.8%. 6/01/2009, 8731.0 Building Approvals, Australia, Nov 2009 http://www.abs.gov.au/ausstats/[email protected]/mf/8731.0?OpenDocument

Industrial Minerals Down Under, 1/2010 Page 4 of 7 Molybdenum: Aussie Q Resources announced it has made a major new discovery at its Whitewash South project, Qld when it intersected an unusual form of mineralisation including a large porphyry-related polymict breccia and hydrothermal system. The company intersected 105m at 597 ppm molybdenum, 0.12% copper and 148 ppm tungsten from 73m, including 10m at 1524 ppm molybdenum, 0.36% copper and 225 ppm tungsten from 136m. Whitewash South is 500m south of Whitewash/Gordons, which has an inferred resource of 71.5 Mt. 6/01/2010, MN

FROM THE DESK

Plenty of promise in multiple projects, ResourceStocks magazine, November/December 2009 (article commissioned by Giralia Resources)

Strong backing for diverse portfolio, ResourceStocks magazine, November/December 2009 (article commissioned by Stirling Resources- Tiwi Island Keysbrook projects)

2000-2009: a decade of minerals, Industrial Minerals Magazine, December 2009. Phosphate face-off, Industrial Minerals Magazine, December 2009. Non-met refractories cool-off, Industrial Minerals Magazine, December 2009. Water borne mineral opportunities, Industrial Minerals Magazine, December 2009.

Brazil’s rise to recovery, Industrial Minerals Magazine, January, 2010. Metal markets in flux, Industrial Minerals Magazine, January, 2010. Lithium special: demand not to be taken Lightly, Industrial Minerals Magazine, January, 2010. Lithium special: countdown to Lithium, Industrial Minerals Magazine, January, 2010. Lithium special: Northern light on Finnish lithium, Industrial Minerals Magazine, January, 2010. Lithium special: Geothermal brine breakthrough, Industrial Minerals Magazine, January, 2010. Lithium special: Li-ion in the driving seat, Industrial Minerals Magazine, January, 2010. Lithium special: the decade in the world goes electric, Industrial Minerals Magazine, January, 2010.

Up and coming conferences / workshops in 2010 (if you know of others, please let me)

Lithium Supply & Markets 2010, 27-28th January 2010, Caesars Palace, Las Vegas, USA . Further details: Victoria Cooper Smith: [email protected]

Processing of Industrial Minerals ’10-Instanbul, Turkey. 4-5th February, 2010. Further details: Contact: Barry Wills ; email : [email protected]; Web: www.min-eng.com/pim10

PDAC 2010, Toronto, Canada. 7-10th March 2010. Contact: Prospectors & Developers Association Canada: Ph. 416-362-1969. Email: [email protected]; Web: www.pdac.ca

20th Industrial Minerals International Congress & Exhibition (IM20). 21-24th March, 2010. The Fairmont Turnberry Isle Resort & Club, Adventura, Maimi, USA

13th Annual Global Iron Ore & Steel Forecast Conference 2010. Sheraton Hotel, Perth23-25th March 2010.

Industrial Minerals Down Under, 1/2010 Page 5 of 7 16th International Bauxite and Alumina Seminar, 29-31st March 2010. Ritz Carlton Coconut Grove, Miami, USA.

Mining the Pilbara 2010. Walkabout Motel Hotel, Port Hedland, WA. 10-11th June 2010.

AusIMM International Uranium Conference, 23-24 June, 2010. Adelaide , South Australia. Further details: The AusIMM Events Department; email: [email protected] ; Web: www.ausimm.com.au/Events/Default.aspx

XXV International Mineral Processing Congress 2010, 6-10 September, 2010, Brisbane, Qld. Further details: Contact: Alison McKenzie; ph. 61-3-9658 6123; email: [email protected]; Web: www.ausimm.com.au/Events/Default.aspx

MEETINGS:

THE BRISBANE MINING CLUB: Speaker: Mr Owen Hegarty, Vice-Chairman G-Resources Group Ltd Time: 12:00 pm for 12.30 pm Date: Thursday 25th February, 2010 Where: Hilton Brisbane Cost: $/person including GST More information : www.brisbaneminingclub.com Email: [email protected] Phone: 07 3831 6218, Fax: 07 3831 7598

THE 141st SYDNEY MINING CLUB Luncheon: Speaker: Mr John Dow, Chairman, & Paul Benson, CEO Company: Troy Resources Topic: “Troy Story” at the crossroads Time: 12:00 for 12.30 pm (finish 2 pm sharp) Date: Thursday 4th February , 2010 Where: Tattersalls Club, 181 Elizabeth St, Sydney Cost: $60 per person More information : www.sydneyminingclub.org Email [email protected] Phone: 02 9416 0633, Fax 02 9416 0617

THE SYDNEY MINING CLUB Luncheon: Speaker: Mr John Atkinson, Managing Director, Company: White Energy Company Time: 12:00 for 12.30 pm (finish 2 pm sharp) Date: Thursday 4th March , 2010 Where: Tattersalls Club, 181 Elizabeth St, Sydney Cost: $60 per person More information : www.sydneyminingclub.org Email [email protected] Phone: 02 9416 0633, Fax 02 9416 0617

THE SYDNEY MINING CLUB Luncheon: Speaker: Mr Owen Hegarty, Vice Chairman Company: G-Resources Group

Industrial Minerals Down Under, 1/2010 Page 6 of 7 Time: 12:00 for 12.30 pm (finish 2 pm sharp) Date: Thursday 1st April , 2010 Where: Tattersalls Club, 181 Elizabeth St, Sydney Cost: $60 per person More information : www.sydneyminingclub.org Email [email protected] Phone: 02 9416 0633, Fax 02 9416 0617

THE MELBOURNE MINING CLUB: Luncheon Series Speaker: Mr David Knox; CEO & Managing Director Company: Santos Limited Time: 12:00 for 12:30 pm Date: Friday 4th February, 2010 Where: The Melbourne Town Hall, Melbourne Cost: $55.00 per head or $500 for a table of 10 More information : www.melbourneminingclub.com Email [email protected] Phone: 03 8614 1802, Fax 03 9629 8603

Industrial Minerals Down Under, 1/2010 Page 7 of 7