A review by Venture Minerals Limited (ASX:VMS, OTC:VTMLF) will determine the potential opportunity to restart the Riley Iron Ore Mine in Tasmania.
The company will need to factor in and reduce several risks, including the fluctuating ore price, before it considers bringing the mine out of care and maintenance – a state it has been in since 2021.
However, the company believes that given the right circumstances, a quick restart is possible and would entail dry hiring equipment where possible, utilising existing Venture employees and avoiding entering into any extensive contracts or commitments which may unnecessarily burden the company financially.
Venture will be driven by the following factors:
1. Mining
Dry screening beneficiation using a mobile screening plant to reduce execution risk would be considered. Venture believes an initial five shipments can be achieved via a low-risk and low-cost dry screening option.
2. Offtake
An offtake agreement with Prosperity Steel (PSU) expires in September 2023, however, discussions are ongoing to move to a fixed pricing mechanism rather than the existing floating price linked to the Platts 62% Fe price index.
3. Shipping
Venture has also started speaking with PSU in relation to potential FOB deal terms, as opposed to CFR to reduce the ongoing working capital requirements of funding the project on a ship-by-ship basis.
4. Trucking
The company is re-assessing the availability and current cost structure for the trucking component of the operation. Early indications suggest availability is there at relatively short notice, however, it is unclear if there is sufficient capacity to reach full production in an economic timeframe.
5. Storage
The storage shed in Burnie is being utilised by a third party, which has resulted in a significant short-term cost saving to Venture. The company is able to gain access to the shed when required. The agreement on the storage facility will end in June 2023 and will need to be renegotiated with the landlord.
6. Mine Access
Venture will need to renegotiate a lapsed road access agreement with Hydro Tasmania. Discussions have already restarted.
7. Working Capital
A quick restart would lower Venture’s ongoing commitments by moving away from a contract-operated mine. This would reduce the need for hire equipment and limit expensive contractual arrangements.
Venture is focused on reducing risk and working capital requirements, by moving to FOB shipping model, however, under this model funding will still be required should Riley restart.