PERTH (miningweekly.com) – Metals developer Centaurus is looking to increase its direct shipping ore (DSO) footprint in Brazil, with the company taking an option to acquire a portfolio of prospective tenements located 8 km from its Candonga DSO project.

Initial surface exploration on two of the new exploration licences, jointly known as Candonga West, have confirmed a substantial strike length of DSO mineralisation, Centaurus told shareholders on Tuesday, saying it provided an attractive exploration target for the company for 2015, and laid the foundation for either expanded or extended mine life for the planned 300 000 t/y Candonga DSO operation.

The Candonga West tenements have an initial exploration target of between 3.5-million and 8-million tonnes of DSO material, grading between 64% and 67% iron, with a further 20-million to 40-million tonnes of itabirite mineralisation grading between 35% and 45% iron.

Centaurus MD Darren Gordon said that drilling to test the extensive strike length of the DSO mineralisation would be a priority target for the company in the first quarter of 2015, in parallel with construction activities at Candonga.

“We know from our experience at Candonga that high-grade DSO operations can deliver strong margins and cash flows for minimal capital outlay, supplying niche iron-ore products that are in high demand in the domestic market.”

Gordon noted that this was an attractive business model for companies like Centaurus, which aimed to make the transition to production in the short term.

“We see this as an attractive bolt-on growth opportunity for Candonga, which could allow us to either extend the life of the initial operation or potentially expand our production base, all for a very modest additional capital cost. These are options we will be exploring in the coming months as we move into production at Candonga and begin to test the opportunity at Candonga West with drilling.”

Centaurus has secured an initial six-month option over the new tenements by paying A$140 000. The company could extend the option twice for a total of two years, by paying an extension fee totalling A$240 000.

Should Centaurus exercise its option over the package, the company would pay the vendor A$475 000.