Magnetite Mines (ASX:MGT) Ltd is increasing the planned production scale of its Razorback Iron Ore Project in South Australia to at least 5 million tonnes per annum from the current 2.2 million tonnes to meet growing market demand for premium iron ore products.
Optimisation studies are underway to investigate a range of higher-grade iron ore products, potentially including high-value Direct Reduction (DR) grade concentrates, which will lead to a refocused definitive feasibility study (DFS).
To prepare for this strategic shift, Magnetite has appointed Jim McKerlie, Paul White and Simon Wandke as new directors, Tim Dobson as the new chief executive officer and Ian Kirkham as the new chief financial officer.
Strategic shift
Newly-appointed Magnetite Mines (ASX:MGT) CEO Tim Dobson said: “In raising its sights, the company is responding to direct evidence of rapidly evolving market conditions associated with the decarbonisation requirements of the iron and steelmaking industry. The company has anticipated this shift and has strengthened its team accordingly.
“The current Razorback ore reserve represents only 11% of the company’s mineral resources, so this strategic shift to a larger initial production scale better aligns the project with the resource potential, while still taking advantage of the abundant existing infrastructure that will support a pragmatic, staged development agenda.
“The company is committed to returning the highest possible value to shareholders, and this strategic shift is fully aligned with that objective."
Changed market conditions
MGT undertook a strategic review of a range of factors in June this year to respond to changed market conditions including increasing market premiums for high-grade, high-quality magnetite concentrates as well as recent metallurgical test-work results which supported the potential to produce DR grade concentrates.
Razorback hosts 3 billion tonnes of resource, inclusive of a 473 million tonnes probable ore reserve calculated to support a 30-year mine life at a 2.2 million tonnes per annum production rate.
The current DFS project configuration is based on the 2019 scoping study and 2021 pre-feasibility study, which sought to minimise upfront capital with a small-scale development targeting a blast furnace iron ore concentrate product.
This positioning was driven by market conditions at the time, including sentiment towards magnetite in domestic capital and investor markets.
The company expects the increase in initial development scale to significantly reduce unit production costs and support optimisation opportunities such as rail access to site.
Magnetite Mines confirmed it is in preliminary discussions with a range of industry players to assist with the project’s development.