PERTH (miningweekly.com) – An expansion study into the Razorback iron-ore project has confirmed the benefits to owner Magnetite Mines.

The expansion study evaluated an increase in production from the initial three-million tonnes a year of iron-ore concentrates to seven-million tonnes a year, incorporating the addition of two processing plant modules to the first stage of development.

ASX-listed Magnetite Mines on Monday told shareholders that the single-step expansion case produced an overall post-tax internal rate of return of 27% and net present value of A$2.4-billion on total development capital expenditure A$1.9-billion at an iron-ore 62% Fe reference price of $110/t, and Australian/US exchange rate of 0.71.

“The definitive feasibility study (DFS) currently underway has provided us the confidence to formalise our options for the first stages of expansion at our Razorback iron-ore project. We are very excited by the results of this study work which underpin our belief in the outstanding returns available from leveraging the benefits of scaling up our large resource in a Tier 1 mining jurisdiction with a supportive state government, access to abundant infrastructure and, importantly, low-cost renewable energy,” said Magnetite Mines executive chairperson and CEO Peter Schubert.

“Magnetite Mines has an inter-generational resource and it was important to ensure our initial path to expansion was supported by robust data that could effectively inform and support stage 1 of our development plans.

“The expansion study demonstrates the company’s commitment to its long-term development strategy for the Razorback iron-ore project and provides further confidence in the significant and valuable optionality realised from progressive expansions of the company’s extensive Braemar resources.

“The expansion scenarios are extremely encouraging and confirm the potential for a very long-life mining operation supporting higher production rates and point to substantive increases in both internal rate of return and net present value coupled with an equally substantive decrease to the projects all-in 62% Fe iron-ore breakeven price for the single-step expansion case to $40/t.”

Schubert said that the company remained focused on completing the DFS and moving to Stage 1 of the mining operation, and was continuing to advance discussions with potential project partners and financiers.