ASX-listed aspiring iron ore producer, Venture Minerals is poised to ride the crest of the monster iron ore price wave as it counts down to the start of production at its revived Riley iron ore mine in north-west Tasmania.
With production anticipated around the June quarter this year, the Perth-based company recently banked $10 million courtesy of a well-supported capital raise. Since then, management has been busy getting all its ducks in a row for the final main construction phase push at the Riley project development site including the critical wet screening plant.
Venture’s decision to bring Riley out of mothballs looks to be on the money, with the iron ore price having surged to an incredible US$160 per tonne in the past year or so. According to the company, the outlook for the rest of 2021 remains positive due to continued strong steel demand generated by insatiable Chinese Government infrastructure spending and continuing supply concerns from the pandemic-ravaged giant iron ore producer, Brazil.
Importantly, the booming iron ore price appears to blow Venture’s August 2019 pre-feasibility study, or “PFS” numbers out of the water, almost paling them into insignificance given the company’s base iron ore price assumption in the PFS of just US$90.35 a tonne for 62 per cent iron content.
Whilst Riley has a short initial contemplated life of mine of two years, the old PFS suggests the rejuvenated mine is set to deliver $172.8 million in gross revenues over that period and $37.64 million in EBITDA for a total cash surplus of some $30 million – and those financials projections were arrived at using the lower iron ore price.
The elephant in the room at Venture is the key question of whether to reassess the PFS on the premise that the iron ore price will continue to hover around the stratosphere or just leave it as it is at the old price and build in an uber margin for error.
Venture previously carried out mining operations at Riley in 2014 before placing the mine on care and maintenance in August of that year due to declining iron ore prices.
CAPEX for the resuscitation of the project has been estimated at a mere $6.7 million.
The company says the latest capital raise provides full funding for the $3.08 million wet screening plant and the first iron ore shipment working capital. All long-lead time equipment items have been sourced and secured now.
Venture says the funds will allow it to complete the final stages of construction and commissioning of the Riley wet screening plant ahead of the planned delivery of its first iron ore shipment from the mine in the June quarter.
The company has also appointed veteran mining engineer Fergus Campbell as lead technical consultant and “production start-up expert” for the Riley mine. Mr Campbell, who has more than 30 years experience, has held senior executive management positions in both mining contracting and resource development companies having worked throughout Australia with a focus on iron ore.
(Fergus Campbell’s) appointment follows the recent completion of additional funding which has accelerated the construction of the wet screening plant (at the Riley iron ore mine) with fabrication work now occurring simultaneously in several workshops across Tasmania and other parts of the country. The scene is now set for the company to move rapidly towards its first iron ore shipment in order to capture these historically high iron ore prices.
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