Joint ventures taking advantage of darling resources

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 02 Oct 2012   Posted by admin


SINCE its establishment in 2006, Bauxite Resources (BRL) has set itself in good stead to take full advantage of the domestic market, with two key joint ventures in place and extensive tenement holdings.
BRL was established to capitalise on WA’s bauxite and alumina opportunities: four of Australia’s seven alumina refineries and four bauxite mines are in the state, and BRL has plans to add to this in the near future.
WA’s Darling Range area provides about 23 per cent of global alumina production and is home to BRL’s flagship Darling Range project area that covers about 24,000 square kilometres. The area hosts a type of bauxite known as gibbsite, an aluminium oxide trihydrate that is typically low in reactive silica and requires low temperatures and pressures for refining.
BRL’s Darling Range tenements are its main focus for development and are divided into three projects areas: north, south and east. The tenements are in close proximity to existing infrastructure and include areas of the same land category as current mining operations belonging to Alcoa and BHP Billiton. These existing mines have established award-winning environmental rehabilitation measures that can be similarly implemented by BRL. The company has successfully negotiated a number of Native Title
agreements and is working towards the granting of priority applications by continuing to liaise with relevant landowners in the area.
Development through partnership In June 2009, BRL announced that it had received Foreign Investment Review Board approval for a $9.85 million share placement with Chinese government agency Shandong Provincial Bureau of Geology and Mineral Resources (SDGM).
In 2010, the company announced that it had signed a farm-in and JV agreement with Shandong No 1 Institute of Geology and Mineral Exploration subsidiary HD Mining and Investment, covering 1000sqkm of Darling Range tenements. BRL chief executive Scott Donaldson said that under the terms of the agreement – known as the BRL-HD Mining JV – HD Mining could earn up to 60 per cent of potential future bauxite mine output by financing all tenement and exploration costs, as well as bankable feasibility
study costs.
“At the moment the HD Mining JV is undertaking exploration. We haven’t set a time frame yet for further development,” Mr Donaldson said.
“The JV…announced its first resources in late 2011 [and] we have a further resource [imminent]. Once we have that resource, the HD Mining JV will have in the order of about 30 million tonnes, and we will make an assessment to decide what the next step is – it could be more exploration, a scoping study or a combination of the two.
“Under the terms of the agreement with HD Mining, HD funds 100 per cent of all exploration, and if they achieve certain objectives they will have earned their share: if HD Mining commits to and completes a feasibility study they will earn 40 per cent [of the resource rights]… if there is a subsequent decision to mine they will earn an additional 20 per cent.”
In January 2011, BRL and Yankuang Group Corporation entered into a number of joint venture agreements relating to the Darling Range under the name Bauxite Alumina Joint Ventures (BAJV).
The BAJV covers areas separate to the BRL-HD Mining JV tenement area. The BAJV had dual goals: exporting high-grade bauxite and progressing feasibility studies for the development of a 1.1 million tonnes per annum alumina refinery in southwest WA.
Yankuang is a large Chinese-based company with assets totalling $18 billion. It is involved in coal production and sales, civil engineering, machinery manufacture, transportation and electricity generation.
It operates the Yankaung smelter in China, which has a production capacity of 140,000 tonnes per annum of aluminium and 100,000tpa of baked anode for aluminium production purposes. The company’s fabrication plant is designed to extrude 133,000t of aluminium and cast 14,500t of ingots each year.
In forming the BAJV, BRL and Yankuang signed 10 separate agreements covering resources, the proposed refinery, management, shareholders and other items.
“Yankuang’s interest is to seek some vertical integration within its aluminium business and source a long-term supply of alumina, as Yankuang does not own an alumina refinery or have direct access to bauxite as part of its business model,” Mr Donaldson said when the agreements were signed. “This has created some strong synergies and opportunities to form the JV.”
BRL reported that a feasibility study would be undertaken by the BAJV – 90 per cent funded by Yankuang – to assess the options available for the construction and operation of the proposed alumina refinery. The refinery would have a life of between 2 and 25 years and, if operations were successful, its life could be extended
by up to 40 years.
BRL reported that preliminary and infrastructure studies would be completed before a BFS was undertaken.
It stated that an agreement to proceed to construction of the refinery would be subject to necessary government and regulatory approvals, along with satisfactory findings from a BFS. Mr Donaldson said a scoping study was underway for the development of the refinery, and the findings from the study would be used initially for a pre-feasibility study and subsequently for the development’s BFS. The proposed refinery would then move through development stages that would include the BFS, site selection and all regulatory approvals.
“Achievement of the agreed program targets would see the feasibility study completed towards the end of 2013, and the refinery construction to be substantially commenced within two years after that,” Mr Donaldson said.
Under the terms of the BAJV, should the refinery proceed to construction, Yankuang would fund 91 per cent of the refinery construction and receive 70 per cent of alumina production. BRL would pay for 9 per cent of the construction costs and receive 30 per cent of production.
Yankuang has paid BRL $9 million for reimbursement of exploration costs, which will be used for general working capital purposes. Yankuang now owns 70 per cent of bauxite rights on the BAJV tenements, while BRL retains 30 per cent of bauxite rights and 100 per cent of other mineral rights.
Through its stake in the BAJV’s agreements, BRL has eight defined projects in the Darling Range: Rusina (3.7mt inferred resource); Aurora (11.4mt indicated and inferred resource); Cardea (6.4mt inferred resource); Vallonia (1.5mt inferred resource); Minerva (2.2mt inferred resource); Juturna (8.2mt inferred resource); and Pomona and
Concordia (resources being modelled).
A new discovery
In early June BRL announced the discovery of a new 73mt bauxite resource called Felicitas, 10km from the township of Wundowie.
BRL reported that Felicitas contained bauxite horizons between 2m and 16m thick, with desireable available alumina to reactive silica ratios.
“The [Felicitas] deposit is considered to have further resource growth potential as drilling programs to date have yet to fully test the lateral extent of the mineralisation and it is therefore not considered to be closed off,” the company said in a statement.
“Additional drilling is planned to commence in 2012 with the intention of adding to the resource base and to provide material for beneficiation and metallurgical test work.
“This test work is in turn aimed at determining the potential for improving the economics of the existing resource through removal of excess detrimental materials, principally quartz and reactive silica, thus upgrading the quality of the ore.”
BRL reported that the discovery of Felicitas – which extends across 2500 hectares of privately-held land – had provided a 143 per cent increase in its global bauxite resources.
“[Felicitas] is situated on a small number of large private landholdings readily accessible by road that have been cleared for farming and grazing, and which are located less than 5km from existing rail infrastructure and… approximately 100km to the Kwinana port,” the company stated.
“The area is bounded to the west by state forest, to the north and east by existing quarry operations, and to the south by farmland.
“[BRL] considers that the new Felicitas resource advances the prospects of the BAJV achieving its stated aim of defining a minimum 90 million tonnes of refinery grade bauxite to underpin the prospects of development of a long term alumina refinery for the joint venture.”
Future focussed
Mr Donaldson said that throughout 2011 BRL had continued preliminary test work programs aimed at enhancing the quality of its Darling Range bauxite projects through a simple beneficiation process.
“This technique has been used by some of the world’s most successful producers of bauxite including the Tombetas and Weipa projects,” he said in a mid-July interview with Open Briefing.
“Our results to date encourage us that the level of deleterious elements such as clays and quartz can be removed with a simple process, and further scoping study level test work is planned for 2012 on existing and new bauxite resources.”
Mr Donaldson said that the BAJV and BRL-HD Mining JV covered areas that contained a number of deposits that could have the potential to be developed, and options were being reviewed.
“The most advanced bauxite mining option is the BAJV mining proposal at our Aurora resource north of Bindoon, Western Australia,” he said.
“The project has been referred to the Environmental Protection Authority of Western Australia (EPA) which has determined that Public Environmental Review is the appropriate level of assessment. We believe that BAJV should complete the studies required by the EPA process later this year.”
On June 19, the WA Mining Warden recommended that an application by BRL for three additional exploration licences south of Bridgetown be refused. Mr Donaldson said that, despite the recommendation, BRL’s approaches to the owners of private land were generally well received.
“We have had 59 exploration licences granted in the southwest of Western Australia to date. Of these, 42 have been granted in the last 18 months,” he said.
“These cover an area in excess of 13,000 square kilometres and have been granted in accordance with the approved application process, representing a very positive step
forward in our plans to provide growth and opportunity in the southwest of the state by, in the first instance, defining exploitable bauxite resources.
“The three additional applications will go to the minister [Mines and Petroleum minister Norman Moore] for a final decision and BRL will make submissions on these in accordance with the established application process.”
Looking further into the future, Mr Donaldson said BRL was exceptionally well placed for ongoing growth and development.


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