The Pilbara’s emerging powerhouse

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 30 Apr 2012   Posted by admin


CALLING itself “the Pilbara’s emerging powerhouse”, Atlas Iron is an independent Australian company hell-bent on the rapid and calculated expansion of its Pilbara-based iron ore operations.
Since listing on the ASX in early 2004, the company has expanded its extensive project portfolio – including the established Pardoo and Wodinga operations – to cover an area of more than 18,000 square kilometres, primarily in the northeast Pilbara region.
Atlas also plans to establish itself in the Pilbara’s northern area as a number of projects near development and first production. Atlas has established a competitive advantage in the WA iron ore sector by acquiring a strategic landholding in the formerly underexplored northern region of the Pilbara.
These exploration tenements have resulted in the discovery of a number of key iron ore deposits within a 150km radius of Port Hedland, and their immense value has allowed the company to start production rapidly and without formidable capital costs.
With two operations – Wodgina and Pardoo – exporting ore, Atlas is gearing up its Mt Dove, Abydos and Mt Webber projects toward production.
In September 2011, Atlas announced a three-part plan – Horizon One, Two and Three – to increase production from 6 million tonnes per annum to 12mtpa in 2013, to 46mtpa in 2017, and then beyond this.
Horizon One
The Horizon One growth program incorporates the near-term focus of the company on expanding production by 6mtpa in 2013, and then expanding further to fill Atlas’s 15mtpa Utah Point port allocation, which will be available from September 2015. To achieve this, Atlas will move forward with several mine and infrastructure developments.
During the December 2011 quarter, Atlas spent $27.7 million on Horizon One developments. The greatest share was allocated to the Wodgina expansion project, which is due for completion in the June 2012 quarter.
Wodgina
The Wodgina project – with a resource of 16.86mt grading 57.8 per cent iron – is approximately 90km south of Port Hedland on the Great Northern Highway. Atlas acquired the project from Talison Minerals in February 2008, and it quickly became the main focus of Atlas’s exploration efforts. From the moment the first hole was drilled in late 2008 to the commissioning of the mine in July 2010, Wodinga has become an integral part of the company’s Horizon One expansion plans.
The company will expand its Wodinga iron ore operations by 75 per cent to about 7mtpa by enlarging the Anson open pit mine and constructing three new open pits.
The expansion project has increased the Wodgina project’s footprint by 162 hectares to a cumulative total of 242ha, with costs expected to be about $80 million in total. Atlas entered into an infrastructure
agreement with Global Advanced Metals (GAM) – owner of the neighbouring Wodgina tantalum mine – in May 2011, in order to share GAM’s infrastructure.
The agreement includes the use of a crushing and screening plant capable of processing up to 6mtpa of ore, as well as a 10MW power plant, 300-person accommodation block and associated administration facilities.
This infrastructure has already saved Atlas more than $10 million in capital expenditure.
Mt Dove
The Mt Dove project – with a resource of 2.8mt grading 58.1 per cent iron – will be a smaller-scale standalone development 72km south of Port Hedland. The company plans to transport product from Mt Dove
via the Great Northern Highway to the new Utah Point port facility. In September 2011, Atlas estimated that it was going to cost about $22 million to establish access roads, infrastructure and pit development.
Late in the December 2011 quarter, the company was advised that Mt Dove was not subject to assessment by the Environment Protection Authority (EPA). As a result, the project has been confirmed as the company’s next mine development, with works likely to start at the site from about May 2012. First production is expected in December 2012.
Abydos
Ore from Atlas’s proposed Abydos mine – which has a resource of 7.47mt grading 57.6 per cent iron – will be processed at Wodgina. As such, the development will include the construction of an east-west road
link between the Abydos and Wodgina mines.
Abydos has been flagged as the company’s next mine development after Mt Dove, with construction due to start in June 2012. Production is expected to be in the range of 2mtpa to 3mtpa during the life of the mine, which is 130km south of Port Hedland. Mt Webber Horizon One production goals also hinge on development of the Mt Webber project, 150km south-southeast of Port Hedland. When Atlas acquired
Giralia Resources in early 2011, the Mt Webber tenement – previously an Atlas-Altura joint venture to the south and a Giralia-Haoma joint venture to the north – was amalgamated under the Atlas banner for the first time. Reverse circulation (RC) drillingby Atlas at Mt Webber – which began in May 2009 under the joint venture – was immediately successful, with the first significant intersections returning up to 66m grading 58.5 per cent iron from surface.
Atlas has since defined indicated and inferred resources for Mt Webber’s Ibanez, Fender, Gibson and Daltons deposits, and exploration is continuing at other prospects in the area.
Atlas said Mt Webber had the potential to be developed either as a standalone operation or as a satellite mine delivering ore to a central processing facility at Wodgina. The combined Mt Webber resource now
stands at 62.5mt grading 57.7 per cent iron.
“The acquisition of this remaining interest in the Daltons tenements is another important step along the path to developing Mt Webber,” Atlas managing director Ken Brinsden said in a statement.
“Mt Webber is a crucial piece of the Atlas growth strategy, which will involve the construction of several new mines to increase our total production rate to 12mtpa by June 2013,” he said.
Utah Point
The new multi-user port at Utah Point in Port Hedland is integral to Atlas’s Horizon One growth program, with Atlas holding rights to 15mtpa of port capacity.
To utilise this, the company has started development of its Utah Point landside facilities by setting up additional stacking and reclaiming infrastructure in Yard Two.
Horizon Two
The Horizon Two growth program targets the expansion of Atlas’s production from 15mtpa up to 46mtpa through rail and port developments, expansion of its North Pilbara mines – including the McPhee
Creek project – and the development of the company’s Southeast Pilbara resources.
McPhee Creek – with a resource of 270mt grading 56.2 per cent iron – is a step change for Atlas that will open up the Horizon Two growth program. After the completion of the Giralia Resources acquisition, Atlas advance dstudies that considered development options for McPhee Creek as part of the Horizon Two expansion.
These are expected to incorporate ideas pertaining to the development of a North Pilbara rail network incorporating McPhee Creek, Mt Webber, Abydos and Wodgina. Atlas is also investigating a number
of other rail options for its Horizon One and Two strategies, including access to its high-grade South Pilbara prospects and third-party rail access. The results of the company’s rail studies are due in the next few
months. The acquisitions of Warwick Resources (with assets based near Newman having a combined land area of more than 5000sqkm) and Giralia Resources in 2009 and 2011 respectively, significantly
strengthened Atlas’s profile in the Southeast Pilbara. The addition of several thousand square kilometres of highly prospective exploration tenements – including a number of advanced projects with potential for long-life direct shipping ore mines – has given Atlas an extremely important foothold in the tightly-held Newman area.
In June 2011, Atlas announced the proposed friendly off-market takeover of FerrAus Limited, another key player in the Newman region. Atlas will continue bullish exploration programs in the area to further develop its resources – currently 548.2mt with reserves of 163mt of iron ore – at prospects including Western Creek, Warrawanda, Hickman, McCameys North, Jigalong, Robertson Range and Davidson Creek.
Atlas is also the founding member of North West Infrastructure (NWI) – a group representing the interests of Atlas, Brockman Resources and FerrAus, which is advancing the development of its 50mtpa South
West Creek port facility. Complementing the Utah Point expansion, this will be integral to Atlas’s plans to increase its production.
The port will be located just outside of Port Hedland, next to Hancock Prospecting’s proposed port development.
The facility will include a stockyard area, rail loop, conveyor and ship-loading equipment, which will all help to deliver iron ore mined by the NWI to ships that will moor at two berths allocated to the group.
NWI’s proposal envisages its South West Creek port facility having a life of more than 50 years, with a throughput capacity of 50mtpa: Atlas and FerrAus having been allocated a combined capacity of 31.5mt, and Brockman the remaining 18.5mt.
Horizon Three
Horizon Three – while not yet clearly defined by Atlas – will target further expansion by moving beyond iron ore and into carbon steel commodities, both in Australia and overseas. The company has said it will “keep its eye out” for low-risk opportunities that could potentially generate world-class resource projects, including its current investments in Shaw River Manganese and Centaurus Metals, an emerging Brazilian iron ore explorer and developer.

 

By Reuben Adams


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