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Updated feasibility study into Paulsens East proves positive

4th February 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – An updated feasibility study into the Paulsens East iron-ore project, in Western Australia, has estimated that the project would require a capital investment of only A$3.4-million for the Stage 1 production, and a further A$3-million to ramp up to Stage 2.

Project owner Strike Resources last year announced plans to implement a two-staged production schedule at Paulsens East, with Stage 1 focusing on surface detrital and low strip ratio material of up to 400 000 t.

The Stage 2 operation would produce at a rate of 1.5-million to 2-million tonnes a year, with exports to transition from the Utah Point to the Port of Ashburton in Onslow.

Strike on Friday told shareholders that the updated feasibility study estimated that the Paulsens East project would have net cash flow of A$138-million, a net present value of  A$104-million, and an internal rate of return of 132% over an initial three-and-a-half-year mine life.

Average C1 cash costs have been estimated at $60/t over the life-of-mine (LoM), and total LoM breakeven costs at around $87/t.

“The completion of the updated feasibility study has allowed Strike to refine the business case for the production of iron-ore from its Paulsens East iron-ore project,” said Strike MD William Johnson.

“Based upon the revised staged approach to production, the project continues to demonstrate the potential to generate very significant cashflows at current and recent iron-ore pricing levels.

“The project breakeven price provides downside protection against any further weakening in the iron-ore price over the LoM. The work done around reduction of project capex into a staged development approach has also assisted in enhancing the overall value of the project and made it more manageable for a company of the size of Strike.

“Furthermore, the project has additional upside potential with opportunities identified to potentially improve iron-ore grades and extend the mine life,” Johnson said.

In order to advance the Paulsens East project towards development, Strike will now work to obtain the outstanding permits and approvals, and will look to secure offtake agreements, while completing contract negotiations with key contractors.

Edited by Creamer Media Reporter

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