Strike Resources has locked down a coveted port slot to ship ore out of Utah Point in Port Hedland from its Paulsens East project in WA. The direct shipping ore agreement will allow Strike to ship up to 400,000 tonnes of ore during the 2022 calendar year as Strike focusses its stage 1 production shipments on high-grade surface detrital ore.
The company has been allocated 200,000 tonnes of port shipping capacity per calendar year from the Pilbara Port Authority or “PPA” that is calculated per the financial year from July to June. This affords Strike the right to export up to 400,000 tonnes during the 2022 calendar year.
The confirmation from the PPA is subject to Strike making a final investment decision on the project and a haulage logistics plan being finalised.
It is also subject to the PPA taking a site visit to the Paulsens East mine once it is operational to complete a product approval process.
Strike has developed a two-stage production plan that will see a change in shipping port planned to coincide with the maximum ore limit pushed through Utah point.
Stage 1 is planned to focus on high-grade, low strip ratio surface material aimed at producing up to 400,000 tonnes during calendar 2022, shipped from Utah point. The product lump grade is estimated at around 62 per cent and the fines grade is expected to come in at 59 per cent. 75 per cent or more is expected to be lump grade according to metallurgical test work completed by the company.
Ore is scheduled to be shipped from the Port of Ashburton at Onslow during stage 2 where it will receive a considerable increase in annualised ore throughput at up to 1.5-2 million tonnes per annum. Stage 2 production affords the benefit of a significantly shorter haulage distance of approximately 235km compared with the approximate 600km drive to Utah Point, significantly improving the project economics. Stage 2 will focus on the ridge of iron ore that contains the current JORC indicated iron ore mineral resource of 9.6 million tonnes grading 61.1 per cent iron .
Strike says capital requirements for the stage 2 ramp up are planned to be funded by the cashflow generated from the stage 1 ore exported through Utah Point.
A works approval application has been lodged with the Department of Water and Environmental Regulations for the proposed operations at the port of Ashburton in addition to an application for miscellaneous and general purpose leases for an area nearby the port of Ashburton that will be used as a staging area for iron ore stockpiles prior to shipping.
Meanwhile at Strike’s Apurimac iron ore operations in Peru, the second iron ore shipment has left port with 15,000 tonnes of direct shipping ore en route to a South American steel mill customer. The buyer will use the shipment as an industrial trial for its steel manufacturing facility where the buyer has a long-term iron ore requirement that Strike could potentially accommodate.
Strike’s maiden iron ore shipment to customers in China took approximately 32 days. The shipping time to its South American buyer will take approximately 6 days drastically cutting voyage times and leading to a direct cost saving for Strike.
The shipment to South America was made on a free on board or “FOB” basis that requires the buyer to pay the costs of ocean freight, insurance, unloading and transportation from the arrival port to the final destination. The FOB agreement was made possible due to the high-grade nature of the Apurimac lump direct shipping ore that attracts a premium for the grade and lump composition.
The receipt of confirmation from PPA of export allocation at Utah Point is another key milestone in the advancement of the Paulsens East Project. Strike is now focussed on finalising contracts with key contractors and the structure and terms of project financing for Paulsens East before making a final investment decision on Stage 1 production.
With port slots highly coveted at Utah Point, Strike has achieved a major milestone in locking down its port shipping agreement, a potential deal breaker for any wannabe Pilbara iron ore producer.
Is your ASX-listed company doing something interesting? Contact: firstname.lastname@example.org