Iron Ore 280504 Web

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May 2004M inerllis IIn ti Energy Sou th Aus trlllill

esourcesINFORMATION SHEETEMERGING NEW RESOURCESFOR WORLD

CLASS IRON ORE AND STEELPRODUCTION INSOUTH AUSTRALIA

INTRODUCTIONSouth Australia is arguably the birthplace ofthe Australian iron ore and steel industry, andcontinues to play an important role as an ironore and steel producer. Its iron-rich rocks areclassified into six deposit types - residual,chemical sedimentary iron formations, Fe-skarnand, of lesser significance, hydrothermal, clasticand magmatic.Production has been overwhelmingly from thehigh-grade residual deposits in the MiddlebackRange of northern Eyre Peninsula. These depositswere the main source of ore for Australia's ironand steel industry from 1915 to the early 1960s,until the Federal Government lifted the exportembargo on iron ore which subsequently ledto production from the Pilbara, commencing1966, and iron ore exploration in South Australiadeclining. It was not until ~1985 that the searchfor iron ore in this State recommenced. During1995-96, the Office of Minerals and EnergyResources and BHP outlined large low-grade andlimited high-grade iron resources. The successof this exploration highlighted the potentialfor further major discoveries in very extensivebanded iron formation (BIF) horizons throughoutthe Gawler Craton.GAWLER CRATONThis stable region of Archaean toMesoproterozoic crystalline basement extendsover almost half the State. Regional aeromagneticand geological surveys have shown that theCraton hosts two very extensive BIF sequences,which are sparsely exposed and generally overlainby thin soil and fiat-lying younger sediments. Theolder BIF sequence occurs in the southern, centraland western parts of the Craton. These Archaeanrocks contain BIF generally

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Emerging new resources for world class iron ore and steel production in South Australia

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~ I I H f R m~~IM~~Figure I Selected Iron Ore Exploration areas on the Gawler Craton.

Gawler Craton

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South Middleback Range which includes the Iron Duke,Iron Duchess, Iron Knight and Iron Chieftain deposits.

In general, total iron within the Lower Middleback Jaspiliteexceeds 20%, averaging 32-37% in the South MiddlebackRange but increasing to 61-68% in haematite orebodies.High-grade haematite resulted mainly from supergeneenrichment of carbonate ore, carbonate-facies BIF andsilicate-facies BIF. Most high-grade deposits are contained inshallowly north and south-plunging synclinal keels.

The vast resources of lower grade ore which extend over the40 km long Iron Knob - Middleback Range zone have notbeen exploited but are on a scale that rivals North Americantaconite resources which continue to provide quality iron oreto the world steel industry.

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ONESTEELExploration and Mining licences held by One Steel LtdWebsite: www.onesteel.com.au.One Steel operates open-cut mines in the Middleback Range,e.g. Iron Duke and Iron Duchess, to produce ore for theWhyalla pellet plant and blast furnace. Some is also shippedto Port Kembla and Newcastle New South Wales, in the formof blended fines and pellets.Iron Duchess Magnetite Project - the magnetite reserveis located in the South Middleback Range, ~SOkm fromWhyalla. OneSteel is currently mining high-grade haematitefrom its South Middleback Range mines and processingto steel in the Whyalla Steelworks. The magnetite ores arelocated under the existing mines and generally occur withinexisting mining licences.

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Figure 2 Onesteel's mineral leases over the MiddlebackRangesCurrent infrastructure includes a water supply pipelineand rail line to Whyalla. Shipping facilities at Whyalla arecurrently restricted to ~SO 000 t.Feasibility studies undertaken between 1990 and 1993to assess the potential of producing a high-grade iron oreconcentrate from low-grade magnetite-bearing rock typeslocated at depth between the Iron Duchess and Iron Dukehigh-grade haematite ore deposits concluded that IronDuchess contains a large resource of magnetite-bearing rockswhich can be beneficiated to produce high-grade concentratesuitable for either pellet or sinter production.The company is currently undertaking a $6 million feasibility

study into expanding its mining operations at the SouthMiddleback Range by utilising the magnetite orebody forthe Whyalla steelworks and selling the remainder of thehaematite ore overseas. A positive outcome to the study willenable OneSteel to expand and start exporting iron ore, i.e.marketing bulk iron ore and iron ore pellets to the Asian Ironand Steel industry.Resource status as at the end June 2002

Total Iron Ore Resources 71.3MtTotal Magnetite Mineral Resource 300 Mt

The resource estimate includes all rock types with a massrecovery of>30% (concentrate) but includes no considerationof whether the ore is minable or whether a sufficiently high-grade concentrate can be produced.MAJOR GAWLER CRATON IRON PROS PECTSH aw ks N estFarm-In Exploration licence held by Felix Resources. Inagreement with Minotaur Resources.This prospect, ~lIS km south-southeast of Coober Pedy, isan extensive Palaeoproterozoic BIF comprising scattered lowoutcrops with up to 20 m of cover; an aeromagnetic anomalyassociated with the BIF horizons extends for ~20 km.Three types of iron ore are indicated from drilling: Low-grade magnetite-BIF bodies lS0-S00 m wide occuras unoxidised sections of the BIF horizons; modeling ofground magnetic and gravity data indicates a depth extentof SOO-l000 m. An inferred resource of ~600 Mt at 3S-40% Fe occurs to 100 m below the level of oxidation in sixdeposits. The average composition of the largest magnetite-BIF body (Kestrel) is 36% Fe, 38% Si02, ~ 1% alumina and0.06% phosphorus.High-grade magnetite zones such as the 30 Mt Kite bodywith drill intersections of34-69.3% iron, with an averageSO.S% over a ISO m width. A high-grade, 24 m thickmagnetite body intersected in the 220 Mt Kestrel bodyaverages 67.2% Fe, 3.22% Si02, 0.40% Al203 and O.OS%P,and represents direct-feed magnetite ore.

High-grade haematite, such as the Buzzard body, is atectonically brecciated BIF. Drill intersections range from48.6 to 67.2% Fe with an average composition of 60.2%Fe, 1.4% Al203 and 0.03% P. This body represents direct-feed haematite ore, with an inferred resource of 6.7 Mt to100 m below the oxidation level.

Preliminary beneficiation and comminution testing carriedout on several magnetite-BIF (3S-40% Fe) deposits fromthe Hawks Nest prospect indicates that a high-grade product(+60% Fe) can be produced, thus rendering the low-gradedeposits economic. The concentrates will be suitable for theAusmelt process and may be readily saleable on the worldmarket as a premium iron ore feed.

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Figure 3. Shows the Mineral Leases held by Felix Resourcesand other Gawler Craton iron are prospects.

Giffen WellFarm - In Exploration licence held by Felix Resources inagreement with Minotaur Resources.Website: www.auironenergy.com.auThis is another Palaeoproterozoic BIF which occurs asscattered outcrops along a gentle topographic rise ~140 kmsouth of Coober Pedy. The associated aeromagnetic anomalyis 6 km long. Gravity and drilling results indicate that near-surface BIF, with a depth extent of 500-1000 m and 150-240m width, is confined to a strike length of ~3 km. An inferredresource of 240 Mt to 100 m below the level of oxidation hasbeen defined, averaging 36.55% Fe, 43% Si02, 0.11% Al203and 0.08% P.Peculiar KnobRetention licence held by Felix Resources.Website: www.auironenergy.com.auA further Palaeoproterozoic BIF, completely concealed by10-30 m of recent sediments, occurs 85 km southeast ofCoober Pedy. Ore comprises specular haematite with minorremnant banding and some residual magnetite. The ore is15-36 m thick, dips steeply to the northwest, and is welldefined by associated magnetic and gravity anomalies. Theinferred resource of 14 Mt at 63.2% Fe with low alumina(0.09-0.l8%) and phosphorus (0.01-0.02%) occurs over alength of 1000 m and to a depth of 100 m below cover. Thedeposit is open along strike and at depth.

SequoiaRetention licence held by Felix Resources.Website: www.auironenergy.com.auAn Archaean BIF, ~ 105 km south-southwest of Coober Pedy,lies beneath a gentle topographic high ~ 1000 m long, 200 mwide and rising 15 m above the surrounding plain, with up to10 m of recent cover. The magnetite-BIF zone has a well-defined magnetic and gravity expression. There are typicallytwo magnetite-rich zones up to 45 m wide, which varylaterally in width and grade. The deposit contains an inferredresource of 20 Mt to 100 m below the level of oxidation at anaverage 28% Fe.Warramboo Iron ProjectExploration licence held by Adelaide Resources NL.Website: www.adelaideresources.com.auThe project area on northeru Eyre Peninsula, which coversextensive Archaean iron formations occurs as coarse-grainedmagnetite-bearing gneiss. The cumulative strike length,estimated from aeromagnetic data, is at least 50 km (Figure 4).Following a limited exploration and metallurgical test-workprogram completed in 2000, the Warramboo Iron Projectshows potential for development into a substantial miningoperation producing magnetite concentrates which, whenpelletised, would have chemical specifications suitable forsale into both the blast furuace and DRI markets.Three magnetic targets (Murphy, Dolphin and Collins) havebeen drilled, and substantial intervals of magnetite-bearinggneiss were intersected in all holes. Iron grades at Murphyand Dolphin are demonstrative of a magnetite content in theorder of 25%.

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Figure 4 The Warramboo Iron are leases and other iron aremineral leases in the Central Gawler Craton.

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Petrographic examination indicates physical characteristicsthat are likely to aid in the production of magnetiteconcentrates by enhancing the ease of mineral liberation andreducing grinding costs during beneficiation.Metallurgical analyses demonstrated concentrate iron gradesranging from 69.7 to 71.4%, averaging 70.3%, which isexcellent.The overall concentrate chemistry result shows that thecontent of elements that could prove deleterious in the DRIprocess fall well within the limits of acceptability.OTHER GAWLER CRATON PROS PECTSJoe's Dam and ManxmanExploration licence held by Minotaur Resources Ltd.Website: www.minotaurresources.com.auThese prospects, which lie close to the Peculiar Knobdeposits, are hosted by Palaeoproterozoic units in the MountWoods Inlier, and have associated base-metal mineralisation.Limited drilling and associated extensive magnetic anomaliesindicate potential for large-scale, medium to high-gradeiron ore development, but 70-100 m of cover has precludedfurther drilling to date (see Figure 3). Significant drillintersections include: Joe's Dam - 64 m at 63.2% Fe from 72 m Manxman - 280 m at >45% Fe from 180 m.Wilgena HillExploration licence held by Grenfell Resources Ltd.Website: www.grenfellres.com.auA number of poorly delineated outcrops of PalaeoproterozoicWilgena Hill Jaspilite are recorded in the Tarcoola region.Wilgena Hill, the most prominent outcrop, was visuallyestimated to contain 60 Mt at 40% Fe above plain level. Nodrilling has been undertaken and the depth extent is unknown.Other smaller outcrops include Coolybring, Big Tank andHicks Hill, and the jaspilite has been intersected by drillholeselsewhere in the Tarcoola region (see Figure 3).Olympic DamExploration and mining licences held by WMC ResourcesLtd.Website: www.wmc.com.auThe Olympic Dam Cu-U-Au-Ag ore deposit, hosted byMesoproterozoic granite, represents a total resource of 2200Mt. Itis a major iron ore occurrence with affinities to theSwedish Kiruna deposit (Figure 5).OoldeaExploration licence held by Cosmo Developments Pty Ltd.Email: [email protected] intense magnetic anomaly near Ooldea, 250 km

west of Tarcoola, is considered to represent an extensivePalaeoproterozoic magnetite-BIF at relatively shallowdepth. One diamond-drillhole at the margin of the magneticfeature intersected magnetite-BIF which was magneticallyconcentrated to a product grading 69% Fe and 2.4% Si02

WilgerupExploration licence held by Centrex Resources Ltd.

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Figure 5 Olympic Dam mineral leases and other iron areprospects on the north eastern Gawler Craton.Address: 3 Keys Court, Hove 5048, South Australia.This prospect, ~100 km north of Port Lincoln, was discoveredin 1992 with a best drill intersection of38 mat 62% Fe from22 m depth. The prospective BIF horizon, which may bePalaeoproterozoic Upper Middleback Jaspilite equivalent, hasan associated maguetic anomaly extending over 10 km (seeFigure 4).Southern-central Eyre PeninsulaSeveral exploration licences held by Centrex Resources Ltd.Email: [email protected] exploration licences held by South Australian IronOre Group Pty Ltd.Contact via parent company Portman Mining Ltd.Website: www.portman.com.auApart from the Wilgerup prospect, very extensive BIF ofthe Palaeoproterozoic Hutchison Group was disclosed byaeromagnetic surveys conducted more than 30 years ago.Moderu aeromagnetic surveys have enhanced the definitionof these features. Exploration in the Greenpatch and Koppioareas has defined a number of narrow, low-grade BIF

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horizons, and limited exploration of the Warramboo andKopi anomalies ~ 160 km north of Port Lincoln has indicatedsubsurface BIF over 50-65 km (Figure 4).Little attention has been given to evaluation of these veryextensive BIF horizons on Eyre Peninsula. Given the recentsignificant high-grade iron intersections at Wilgerup, thesevast zones warrant detailed evaluation.S tuart S helfExploration licence held by WMC Resources.Website: www.wmc.com.auExploration licence held by Gunson Resources Ltd.Website: www.gunson.com.auSeveral other potentially very large iron deposits in GawlerCraton units 300-1000 m below the surface are indicatedfrom drilling; these include the Acropolis, Oak Dam (WMC)and Emmie Bluff (Gunson Resources) prospects which allhave polymetallic associations.M o un t C hris tieExploration licence held by Dominion Gold Operations.At least four aeromagnetic anomalies representing ArchaeanBIF have been defined in this area, 120 km west-northwestof Tarcoola. At Mount Christie, the most prominent outcrop,resources of 5-20 Mt at 40% Fe are inferred from limiteddrilling (Figure 3).IN FRAS TRUCTURE ON TH E GAWLER CRA TONR o a d tr an sp or tSeveral freight companies service the craton using majorsealed routes supported by numerous unsealed roads andtracks. The primary sealed roads include: Stuart Highway Eyre Highway Lincoln Highway Flinders HighwayA i r t ra n sp o rtThere are numerous airstrips in the area, including airports at: Port Lincoln Port Augusta Streaky Bay Ceduna Woomera Olympic Dam Coober PedyRa i l t ra n sp o rtAn Adelaide to Darwin rail line is currently underconstruction. Already in existence are two major lines (the

east-west Trans Australian Railway and north-south CentralAustralian Railway) and several smaller lines connecting: Thevenard Whyalla Port Bonython Port Pirie Port Augusta Woomera Tarcoola AndamookaS e a t ra n sp o rtFour ports service the area, all of which are capable ofaccommodating and loading bulk carriers. They are ownedand operated by different entities, as listed below: Port Bonython, Department of Transport Whyalla, BHP Thevenard, Ports Corp SA Port Pirie, Ports Corp SAEne rgyNortheru Power Station, Port Augusta.There is currently very little excess electricity supplied tothe area that could be used for industrial and/or miningoperations. Natural gas is piped from the Moomba area viaPort Pirie and Whyalla by Epic Energy. Agreements arebeing finalised to build a gas pipeline from Victoria to SouthAustralia which will improve energy supplies by summer2004.Wate rThere is little surface water available, and most water forboth towns and mining operations comes from groundwaterobtained through boreholes. There are reasonably abundantsupplies of non-potable groundwater available for use asprocess water located in palaeochannels throughout theGawler Craton.SOUTH AUSTRALIA - MORE TO EXP LORE! The South Australian Goverument is committed to thelong-term sustainable economic growth of the State

The State has a long history of iron ore mining andproduction

South Australia has readily accessible high-qualitygeoscientific mapping and information

The State is centrally located, with easy access to growingAsian markets

The Australian dollar is low relative to US, European andother currencies, making investment attractive

A workable land access agreement is in place Low business costs compared to our near neighbours Low sovereign risk A supportive legislative framework

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