All images: Mineral Resources.
BY ELIZABETH FABRI
MINERAL Resources’ acquisition spree continues – this time a farm-in deal with Brockman Mining, the owner of the Marillana iron ore project in the Pilbara.
The increasingly diversified Mineral Resources (MinRes) has been striking deal after deal in recent months.
Rewind the clock back to June, and there was the landmark purchase of Cliff’s closing Koolyanobbing iron ore operations following its unsuccessful takeover bid for Atlas Iron.
In October, its next deal: an acquisition of BCI Minerals’ Kumina iron ore project in the Pilbara.
A month later a $1.58 billion agreement to sell half its share in its Wodgina lithium project to Albemarle followed, along with a separate JV deal to acquire a share of Hexagon Resources’ McIntosh graphite project in WA.
Then came December when MinRes signed an agreement to increase its interest in Mt Marion from 43.1 per cent to 50 per cent.
Marillana Farm-in
After the Christmas break it was straight back into business for the team, with its Brockman Mining deal declared ‘unconditional’ and proceeding to the farm-in stage.
The JV, first announced to market in July, would see MinRes acquire a 50 per cent stake in the project once conditions were met.
Marillana was within the Hamersley Iron province in the WA Pilbara, and was capable of producing a saleable product grade of at least 60 per cent iron.
The project would initially operate a 20 million tonne per annum iron ore export operation, with potential to increase to 30mtpa.
Conditions for acquiring the project included obtaining necessary approvals; a $10 million loan to Brockman; $250,000 spend on exploration and development activities; the completion of the process design criteria of the processing plant; optimisation of the mine plan study; and finalisation of its mine development layout plan.
“Upon satisfaction of the farm-in obligation, Brockman and MRL will form an unincorporated 50:50 joint venture which will proceed to develop Marillana,” Mineral Resources said in a statement.
“The Mine to Ship Logistics agreement remains subject to a number of conditions precedent, including MRL executing a State Agreement with the Western Australian Government, procuring all the leases and licences for the light rail system and port infrastructure within the inner harbour of Port Hedland, obtaining project finance to fund the construction and commissioning of the rail and port infrastructure and the company’s board making a final investment decision to proceed.
“Once unconditional, the Mine to Ship Logistics Agreement provides that the company will construct, commission and operate the rail, rollingstock and port infrastructure required to transport up to 30mtpa of iron ore from the mine site to Port Hedland, and load it on to vessels for export, for the life of Marillana.”
2019 Outlook
In the company’s 2018 Annual General Meeting, it said FY19 would be the most important year in its history to date, with multiple projects either ramping up or ramping down.
Highlights of the year included commissioning of Train 1, 2 and 3 at the Wodgina spodumene concentrate plant, and upgrades at the Mt Marion lithium project to increase nameplate capacity to 450,000 tpa and achieve a higher 6 per cent grade product.
FY19 planned production included 7mt of iron ore from Iron Valley; 3.5mt of iron ore from Koolyanobbing; 315,000 tonnes of 6 per cent and 75,000t of 4 per cent spodumene concentrate from Mt Marion; and 422,000t of DSO from Wodgina, and 60,000t of 6 per cent spodumene concentrate.
Partnering up at Wodgina
Once ramped up, the Wodgina project was expected to produce up to 750,000tpa of 6 per cent spodumene concentrate initially for sale, and ultimately feedstock for a lithium hydroxide plant.
MinRes’ transaction to sell a half stake in Wodgina to Albemarle was expected to be completed at some point this calendar year.
From here, the parties would jointly fund, design, build and operate a battery grade lithium hydroxide plant at Wodgina in two stages.
Each stage would be targeted to produce up to 50,000tpa of lithium hydroxide (LCE basis).
But the timing of the second stage would depend on subsequent lithium market conditions.
MinRes managing director Chris Ellison described the Wodgina JV as an extremely good fit.
“Our organisations share the same vision to develop Wodgina, a tier one asset, as a world class, 30-plus year integrated lithium operation together,” Mr Ellison said at the time.
“I am confident that with MRL and Albemarle working together at Wodgina, we will produce and supply high-quality, competitively priced lithium products into the market to meet increasing global requirements for these important energy storage products.”
Spending Big at Mt Marion
Mt Marion was another area of focus for the company during FY19 after MinRes and Ganfeng Lithium agreed to increase their interest in the project by acquiring Neometals’ 13.8 per cent interest for $103.8 million cash ($51.9m each).
The deal was anticipated to be finalised at the beginning of February.
MinRes said purchasing a higher stake was “consistent with MRL’s strategy of identifying value-adding opportunities in the lithium sector.”
The deal would still enable Neometals to have ‘life of mine’ offtake option rights for 57,000 tonnes of spodumene concentrate per annum from February 2020, which would be fed into its planned downstream processing facilities in Kalgoorlie.
Neometals managing director Chris Reed said the timing was right to sell its interest in the project.
“The company is changing its focus and exposure away from upstream concentrates and pursuing a more holistic and integrated approach to the lithium battery thematic,” Mr Reed said.
