JOHANNESBURG (miningweekly.com) – Australian iron-ore company Territory Resources is looking to extend the operating life of its Frances Creek mine, in the Northern Territory, chairperson Andrew Simpson said on Monday.

He said in a copy of a speech delivered at the company’s annual general meeting that Frances Creek’s operating life was less than three years, based on current reserves and production levels.

“To assist in extending the current level of reserves and the operating life of the mine, we are currently in the process of adopting a three-part mine extension plan,” Simpson explained.

This plan would include undertaking a comprehensive gravity survey of all the company’s prospective tenements in the region.

Historically all exploration programmes at Frances Creek have been based upon either outcropping iron-ore or the use of traditional drilling programmes. While success could not be guaranteed, Simpson said that the company remained hopeful that a gravity survey could identify some additional resources that would add to the economic life of the mine.

“Our second focus is on developing a sales programme for high-manganese iron-ore deposits within the Frances Creek area. This specifically includes the Miller’s deposit, which is estimated to contain about 1,2-million tons of ore.”

Initial discussions have already been held with Asian commodity trader Noble’s marketing team regarding the saleability of this material, and it now appeared “highly probable” that a suitable market position could be confirmed, Simpson said.

“These high-manganese deposits have not been reported in the reserve statements but have previously been disclosed separately in the resource statements, and will only be included once a confirmed production programme has been completed that matches required product specifications for sale to selected steel mills in China,” he added.

The final aspect of the plan involved a review of all lower grade iron-ore deposits in the Frances Creek region, with a specific focus on deposits with grades ranging from 48% to 52% iron.

Simpson noted that when reviewing these deposits for potential development, appropriate metallurgical beneficiation programmes would be reviewed including actual upgrading costs.

Given that much of the necessary infrastructure was already in place, and with the recent improvement in iron-ore prices, it was reasonable to believe that even with a higher operating cost these lower grade deposits might add to the economic life-of-mine, he added.

Simpson stated that even if the company was successful with the extension programme at Frances Creek, the fact remained that the operating life of the mine was limited and would not be sufficient to support the company’s aspiration to become a major supplier of raw materials to the rapidly-expanding Asian steel industry over the next decade.

“We firmly believe that it is now time to spread our wings and develop a resource base for the future, underpinned by our market position and the expertise we have developed at Frances Creek.”

Simpson said to this end, during November this year, Territory’s senior management held a strategic discussion with Noble Resources in Hong Kong.

“Noble’s position in the Chinese steel industry is unique. They are the world’s largest independent seller of iron ore, this year selling over 30-million tons. They are also very active in the market with a number of other steel-related products including coal, manganese and chromite.

“Like us, Noble’s view of the forward market for these products is extremely positive, and the major challenge is to secure increasing quantities of high-quality raw materials.”

He added that Noble was keen to expand its partnership with Territory Resources to develop an increased supply programme for carbon steel-related raw materials from Australia.

Noble has offered to provide financial and corporate support, and to assist with the early acquisition of suitable exploration and near-term mining projects.

The mutually agreed criteria for these investments were that the products must be centered on supply to the steel industry and that projected operating and supply costs must fit reasonably on the forward cost curve versus other major suppliers.

“This business development programme is now under way and we are in the process of recruiting business development resources to assist with identifying and targeting suitable opportunities. Initial acquisition targets will primarily be in iron-ore, however, quality opportunities in manganese and chromite ore are also currently under consideration,” said Simpson.

During the next two years, the company’s target would be to secure one advanced project ready for production within a two to three year time frame. The company would also consider securing a number of preliminary exploration projects that could be developed at a later date.

“The expertise we have developed at Frances Creek and our understanding of the forward product markets will be the guideline for these acquisitions,” Simpson concluded.