TIDMPTMN
RNS Number : 1304Z
Petmin Limited
12 March 2012
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
"Committed to growth, dedicated to value"
JSE code: PET AIM code: PTMN
ISIN: ZAE000076014
("Petmin" or "the Group")
Commercially significant maiden resource statement for Petmin's
iron sands to pig iron project in Canada
Petmin has issued a maiden resource statement for its
jointly-controlled North Atlantic Iron Corporation (NAIC) iron
sands to pig iron project in Canada's Labrador province.
Petmin will now accelerate its investment in NAIC based on the
project's technical and economic viability.
The iron sands resource provides an abundant low-cost feedstock
for production of a concentrate with in excess of 50% Fe /ton at a
cost of under US$30 per ton for conversion into high-purity pig
iron, with a 25 to 30 years life of mine for Phase 1 production of
500,000 tonnes of pig iron annually.
The resource statement, based on just 3% of NAIC's 450km2 claim,
indicates an inferred resource of 594 million tonnes of iron sands
at 9.35 weight percent (wt %) heavy minerals of which 38.02% is
Fe2O3 equivalent (at a cut off grade of 5% heavy minerals).
The resource statement is based on the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) reporting guidelines
(Canada's equivalent of SAMREC/JORC).
Petmin has an earn-in option to acquire 40% of NAIC for a total
consideration of US$25 million, plus a further option to acquire an
additional 9.9%. Petmin's investment to date is US$3.5 million for
its current stake of 10.17% in NAIC.
"We now have independent verification of a very substantial
resource suitable for production of a quality concentrate which
becomes a low-cost feedstock for high-purity pig iron," said
Bradley Doig, Petmin director of business development.
"Our exploration of just a small part of the extensive NAIC
claim demonstrates the potential for NAIC to become a major low
cost producer of pig iron."
The NAIC claim in Labrador is close to clean low-cost power and
an existing port seven days from US markets.
Petmin and its partners in NAIC, Grand River Ironsands
Incorporated, propose to produce pig iron for export to the US and
other countries.
NAIC has already produced a concentrate of between 55% and 60%
iron from which pig iron has been produced using two different
technologies on a batch scale.
During the next six months NAIC will carry out a continuous
demonstration scale smelt test and complete an updated National
Instrument (NI) 43 101 compliant statement.
NAIC has drilled 4,500 metres and analysed more than 1,400
samples.
Exploration to date and the maiden resource statement are based
on just 3% of the NAIC claim, which has been drilled to a depth of
15 metres. Aeromagnetic and Lidar surveys show potential for the
resource to be extended at least to 45 metres.
Exploration/drilling plans for the next six months include step
out drilling as well as larger diameter drilling on the current
resource to a depth of 45 meters. This deeper drilling has the
potential to triple the size of the resource on the 3% of the claim
currently explored.
Cash costs for Phase 1 are estimated at around US$210 per tonne
with an all in cost (including interest, depreciation and
amortisation) of approximately US$260 per tonne. Average pricing
over the last 12 months has been >US$500/t free on board (FOB)
Ponta da Madeira - Brazil. At these levels, based on current
capital expenditure and operational expenditure estimates, Phase 1
of the NAIC project has a net present value of over US$450
million.
Tenova has been appointed and is busy with a conceptual design
of the furnace. An engineering company will be contracted to carry
out a similar process on the concentration plant.
Pig Iron - the commodity
Pig Iron is used as a feedstock into the steel making process.
Most pig iron produced in the world is used in integrated steel
mills with merchant pig iron (pig iron traded on world markets)
making up about 70 to 80 million metric tons of the approximate 1.1
billion tonnes produced globally.
Significant merchant pig iron producers are located in Brazil,
Russia and Ukraine. Brazilian producers are expected to be the most
direct competitors to NAIC due to proximity to the US market.
In December 2011 it was estimated that the median cost of
production of the Brazilian pig iron producers was around US$475
per tonne delivered FOB to New Orleans (Stemcor).
World Steel Dynamics estimates the world pig iron production
requirements to increase to approximately 1.7 billion tonnes in
2025 from 1.1 billion tonnes in 2011.
Qualified person
The resource estimate was undertaken for Petmin by SRK
Consulting Engineers and Scientists'(SRK) Mark Wanless Pr. Nat.
Sci., a geologist with more than 15 years experience in southern
Africa and internationally. His expertise is in due diligence
studies and mineral resource estimation in a range of commodities
including gold, PGEs, base metals, iron and manganese, and mineral
sands.
Mark is a Partner and Principal Geologist with SRK, and is
registered as a Professional Natural Scientist with the South
African Council for Natural Scientific Professionals. He is an
associate member of the South African Institute for Mining and
Metallurgy.
Mark is a Qualified Person under the definitions of NI43
101.
The resource estimation methodology and results were also
reviewed and approved by Don Hains, P. Geo., Don is a registered
Professional Geoscientist in Ontario and is an independent
Qualified Person in terms of NI43 101. Don Hains has also reviewed
and verified the technical information contained in this
release.
Don is an independent Professional Geologist who specializes in
feasibility and mineral economics studies related to industrial
minerals and resource development.
Enquiries:
Petmin
Bradley Doig (Director of business development)
+27 11 706 1644
Media
Jonathon Rees
+27 76 185 1827
Sponsor and Corporate Adviser (JSE)
River Group
Andrew Lianos
+27 834 408 365
Nominated Adviser and Broker (AIM)
Macquarie Capital (Europe) Limited
Steve Baldwin
+44 20 3037 2362
Nicholas Harland
+44 20 3037 2369
Johannesburg
12 March 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
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