CuFe Ltd (ASX:CUF) is monitoring its iron ore projects, with drilling complete at the Yarram Iron Ore Project.
At Yarram, the company holds a 50% interest in Gold Valley Iron and Manganese Pty Ltd, the owner of the iron ore rights over the project, which is 110 kilometres from Darwin Port.
In late September the company kicked off a drill program at the Yarram Project, targeting extensions to known mineralisation, outcropping ore zones and several geophysical targets.
The program was hampered by periods of heavy rainfall and high temperatures but was successfully wrapped up ahead of the wet season.
An aircore drill program, executed by Australian Air Core, wound up on October 26.
Program details
CuFe drilled 24 holes across 1,358 metres, with an average depth of 56 metres and a maximum depth of 105 metres.
Drilling intercepted goethite and hematite lenses and surface laterites and enrichment that is typical of this area.
Samples have been progressively delivered to the laboratory for analysis and results are expected to return over the coming month.
Remaining works on site in the near term include down hole surveys, a detailed LIDAR topographic survey and the collection of metallurgical bulk samples from surface costeans and cuttings.
Prudent course of action
The company also holds a 60% interest in the JWD Iron Ore Mine via its subsidiary Wiluna Fe Pty Ltd, which operates the joint venture.
CuFe has been closely monitoring the iron ore price, which has been falling each month since the end of March, from US$158/dmt to US$82/dmt last week.
At these levels, and with hedge coverage ending, the company feels its most prudent course of action is to temporarily suspend operations. It has been reducing activity recently in anticipation of this course of action being necessary so has limited stock in the system.
Activities that will continue include:
- crushing and screening remaining run of mine stock (ROM) at the site and hauling it to port for shipment in December; and
- using the crush and screen plant in trials to explore the potential to recover high-grade product from a discrete portion of the waste dump on site.
Subject to the results of the trials this material could be a source of low-cost product which can be accumulated at the mine in advance of the recommencement of full operations.
Key equipment remains on site at JWD to facilitate rapid ramp-up once iron ore market is supportive.
The company says it is in a good position to make the decision to suspend having completed all its delivery obligations under its steel mill sale contract and repaid all debt advanced against stockpiles.
Executive director Mark Hancock said: “It’s pleasing to complete a further drill program at Yarram, which has always been an exciting project for us given there are so few iron ore projects in Australia that host high-grade iron ore so close to available capacity at an established port.
“Conditions were challenging for the drillers and the CuFe team on the ground so I thank them for their efforts to conclude the program safely and efficiently.
“I was also very pleased to spend three days on site earlier this month meeting with the Traditional Owners of the land and explaining CuFe’s objectives for the Yarram project, and to receive their feedback on how we can best work together. We look forward to continuing to grow that relationship.
"Well placed to respond to rebound"
“With regards to our existing mining operations at JWD it is obvious at current iron ore prices the right thing to do is to suspend the majority of our operations on site to preserve the value of ore in the ground for better markets.
“With the mine now opened up and good quality ore readily accessible at reduced strip ratios we are well placed to respond to a rebound.
“I have seen many times before how iron ore prices can rebound quickly once sentiment turns in China, this was most recently illustrated when prices hit the mid-80s in November 2021 and were back in the mid-120s by December 2021 and then the 160s earlier this year so it’s a matter of being patient and staying ready.
“Stock levels of iron ore at Chinese steel mills are the lowest level for nearly a decade on a days of consumption basis so as sentiment improves significant restocking is likely to be required.”