The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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October-December 2015 | ASIA Miner | 61 Chinese Investment Abroad IRON Road Limited has signed non-binding agreements with fve signifcant Chinese steel companies aimed at progressing long- term iron ore supply agreements for the Central Eyre Iron Project (CEIP) in South Australia. The company believes the MoUs will un- derpin development of the CEIP. The MoUs will see Iron Road and the Chinese parties work together to evaluate the benefts of using high quality CEIP product in Chinese steel mills. The steel companies will conduct technical evaluations of iron concentrate, to verify commercial and technical merits, including value in use, of the product as a precursor to entering discussions towards a Letter of Intent for the long term supply of concentrate. Four of the Chinese companies have requested anonymity for reasons of commercial confdentiality but Iron Road is confdent of their commitment to undertake the activities contemplated in the MoUs and ultimately, to use signifcant quantities of CEIP product in their operations. One of the parties, Shandong Iron & Steel Group Co Ltd (ShanSteel), has signed a further agreement, outlining its intention to enter into a Letter of Intent with Iron Road covering the supply of premium iron products to ShanSteel from the CEIP. ShanSteel is China's seventh largest producer of steel. The ShanSteel agreement also proposes that ShanSteel and Iron Road will collaborate to seek a project funding solution to enable Iron Road to reach a fnal investment decision, in order to commence con- struction in 2017. The ShanSteel agreement was signed at a ceremony alongside the Shandong-South Australia Friendly Cooperation Action Plan (2015-2018) and observed by South Australian Premier Jay Weath- erill and Shandong Provincial Committee of the Communist Party of China secretary Jiang Yikang together with other honoured guests. ShanSteel is headquartered at Jinan in Shandong Province and is a state-owned entity. Iron Road managing director Andrew Stocks said the agree- ments were a major milestone for Iron Road as it progressed towards development of the CEIP. "Our high quality product from the CEIP offers signifcant advantages for steel mills intent on running the most effcient and environmentally compliant opera- tions, hence the strong interest we have received from a number of parties. "We are very happy that ShanSteel wishes to strengthen our relationship and continue its evaluation of the CEIP. We also look forward to collaborating further with ShanSteel on enabling the successful completion of our fnal preparations prior to funding and construction of the Central Eyre Iron Project." METRO Mining has signed an MoU with Xinfa Group covering baux- ite offtake from the Bauxite Hills project in on Cape York, Far North Queensland, about 95km north of the town of Weipa. Xinfa is one of the largest integrated aluminium companies in China with signifcant refning and smelting operations in Shandong, Guangxi and Xinjiang provinces. Xinfa is currently a 7.2% shareholder in Metro. The agreement contemplates a minimum contract tonnage of 1 mil- lion tonnes a year up to a maximum of 1.2 million tonnes a year over the initial fve years term with an option to extend by mutual agreement. This represents around half of Bauxite Hills' annual production. The project has an ore reserve of 48.2 million tonnes with high grade total alumina of 50.2% and reactive silica of 6.3%, which is typical of Western Cape York bauxite deposits destined for export. ASX-listed Metro forecasts total annual production of up to 2 million tonnes from the project, which remains on track for frst production next year. The MoU provides for FOB pricing to be determined, subject to market conditions and bauxite quality. The quality requirements have been agreed, within defned parameters. A shipping schedule is to be agreed by the parties annually in advance. It is the intention of both parties to produce a binding long term agreement within four months of the MoU, which was signed in early August. The MoU is the latest signifcant event in a year of great prog- ress for Metro Mining. In June it announced a 398% increase in its ore reserve at Bauxite Hills from 12.1 million tonnes to 48.2 million tonnes, enough for a 27 year mine life. An update of the geological model resulted in the resource upgrade. The project could be in construction mode in the second quarter of 2016 and producing by the fourth quarter of 2016 at an annual rate of up to 2 million tonnes of Direct Shipping Ore (DSO), which allows the development of a mine with lower capital and lower op- erating costs. In terms of transportation, the ore would be hauled and trucked 5-10km to a stockpile and barge loading area. Then the ore would be barged 10km down the Skardon River ready to be transhipped to a bulk carrier for export. The location of the project at Cape York is ideal as it is close to international shipping routes with low relative freight costs to China. Xinfa to take Bauxite Hills product Iron Road Limited's Central Eyre Iron Project is on South Australia's Eyre Peninsula. Iron Road signs Chinese agreements

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