Weld Range Joint Ventures (Various Interests)
Dragon Mining announced during September 2009 that a wholly owned subsidiary, Weld Range Metals Limited had entered into an agreement to move to a 100% interest in the Weld Range tenements with the purchase of majority interests from the other joint venture partners.
In February 2008, Dragon Mining entered into an agreement with Atomaer Holdings Pty Ltd to evaluate the potential of the project. Under this agreement Atomaer has the right to subscribe for a 60% interest in Weld Range Metals for $500,000. Atomaer is a private company based in Perth, Western Australia and is responsible for raising funds for the acquisition and development of the Weld Range Metals Project and providing and/or procuring process technologies, technical personnel and management services for the purposes of conducting and managing the evaluation and development of the Weld Range Metals Project.
The tenements which are known to host chromium, iron, nickel, cobalt and PGE mineralisation are located in the Murchison District, close to the centre of the new iron ore province in the Mid-West region of Western Australia.
The Weld Range Metals Project comprises the evaluation, development and operation of facilities for production of intermediate and refined alloys containing chrome, iron and nickel as feedstock for the production of stainless steel and special alloys (“Project”).
Weld Range Metals is currently reviewing the optimal financing structure for the Company to undertake feasibility studies and, if viable, construction of vertically integrated production facilities for stainless alloys. As an interim step an Information Memorandum is being finalised to support the raising of approximately $5 million to repay the funds advanced by Dragon Mining and Atomaer to purchase the remaining interests in the Tenements, as well as undertake further drilling and scoping studies.
The Weld Range Metals Project is located in the Murchison District 65 kilometres north-northwest of Cue, approximately 750 kilometres northeast of Perth in Western Australia. The Project comprises a series of contiguous granted Mining Leases, Prospecting Licences and Mining Lease Applications which encompass a total area of 78.5km².
The project is located immediately north of Sinosteel Midwest Corporation Limited’s Weld Range Iron Ore Project. The proposed new rail link from the Mid West Region to the proposed Oakajee Deep Water Port north of Geraldton, which will service Sinosteel’s iron ore project, will be routed close to the southern boundary of the Project area.
The objective is to develop a mine at Weld Range and to establish processing facilities within the proposed Oakajee Industrial Estate near the proposed Oakajee Deep Water Port, with a view to producing intermediate and refined stainless alloy from the mineral resources containing chromium, iron and nickel.
Weld Range Project
Weld Range Metals initial focus will be on the chromium mineralisation in laterite. The chromium in the laterite profile is considered to have been derived from weathering of the ultramafic complex and comprises a chromiferous, ferricrete, silicrete resistant cap overlying nickeliferous, limonite (hydrous, iron oxide) and saprolite. A well defined arcuate zone of goethitic and haematitic laterite with up to 18% chromium runs through the centre of the project area.
Historical work on the tenements has been reappraised by independent consultants Snowden Mining Industry Consultants, resulting in an updated Inferred Resource estimate for the chromium rich portion of the laterite. The chromium Mineral Resource has been classified as Inferred in accordance with the 2004 JORC Code, based upon the geology, mineralisation interpretations and drill hole data. The Mineral Resource reported above a 4% chromium cut-off grade is provided in the Table below.
Weld Range Inferred Mineral Resource at a 4% Cr cut-off grade.
| Tonnes (Mt) | Cr (%) | Fe (%) | Ni (%) |
|---|---|---|---|
| 63.5 | 5.2 | 38.1 | 0.38 |
Ordinary Kriging (OK) grade interpolation, constrained by resource outlines of mineralisation envelopes prepared using a nominal 3% chromium cut-off and a minimum thickness of 2 metres; block dimensions used in the model were 100m EW x 25m NS x 2m Vertical; a density value of 1.5t/m³ and a top-cut of 1.1% for nickel block grade estimation.
The resources identified in the chrome mineralised area are near surface and amendable to bulk open cut mining. Snowden has reported a high grade zone (above a cut-off grade of 4.2% Cr) comprising 10.5 Mt with an average grade of 6.2% chromium, 45% iron and 0.41% nickel, included within the total Inferred Mineral Resource. Approximately 86% of this high grade zone is from surface to a depth of 4 metres. Portion of this higher grade zone will provide plant feed for the first 10 to 20 years of the Project. Mining studies will be undertaken as part of a scoping study.
Over the last 12 months the Company has evaluated several process options for the recovery and production from the mineral resources contained in the chrome mineralisation. A desktop study prepared for Atomaer proposed pyro-metallurgical processing for the treatment of ore to produce a product containing chrome, iron and nickel as a feedstock for the production of stainless steel and other alloys.
The Company engaged ProMet Engineering Pty Ltd, a Western Australian based processing engineering firm to review the desktop study and it was recommended that a scoping study be conducted with the objective of establishing a sound technical and commercial case for the development of a vertically integrated processing and fabrication facility for the production of an intermediate stainless alloy from the mineral resources at Weld Range.
Production of chrome, iron and nickel will position the Company in the iron and steel industry in general and the stainless alloy business in particular. Marketing studies will be undertaken as part of the scoping study.