Coburn HMS Project

1. General Background

Heavy minerals, such as zircon, titanium dioxide minerals, garnet, sillimanite, kyanite, and staurolite, are eroded from their parent igneous or metamorphic rocks and are transported by water and/or wind action over long periods of geological time, often ending up in the same locations as placer deposits. When such deposits contain sufficient concentrations of valuable heavy minerals, principally zircon and titanium dioxide minerals, they are referred to as heavy mineral sand deposits.

Most of the commercially attractive mineral sand deposits occur along old coastlines, particularly where high energy wave action and strong winds have prevailed over long periods of time. Beach, offshore and sand dune deposits comprise the main varieties of mineral sand ore environments, the Coburn deposit being hosted in a fossil near-coastal sand dune system.

 

2. Project Details, History and Current Status

  • The Project is located 250 kilometres north of the regional centre and port of Geraldton, immediately south of Shark Bay and just outside the eastern boundary of the Shark Bay World Heritage Property.   It covers 1200 square km of a fossil coastline which hosts a world class heavy mineral sand field (Figure 1).  The Project straddles the eastern boundary of the Shark Bay World Heritage Property but all exploration to date has been to the east of the Shark Bay Property.
  • Drilling since 2000 has outlined a major heavy mineral sand deposit known as the Amy Zone (Figure 2) which is over 35 kilometres long, up to 3 kilometres wide and between 10 and 50 metres thick.
  • Approximately two thirds of the Amy Zone has government ministerial approval for mining. This area has JORC-compliant ore reserves of 308 million tonnes, averaging 1.2% heavy minerals. Zircon comprises 23% of the heavy mineral suite, the other valuable heavy minerals being high titanium ilmenite (61.5% TiO2) 48%, rutile 7% and leucoxene 5%, the latter two minerals to be mixed into a HiTi product. The northern third of the Amy Zone has not yet been approved for mining but contains a non-JORC, potentially mineable resource of 106 million tonnes averaging 1.3% heavy minerals.
  • Strandline completed a Definitive Feasibility Study on the Project in 2009. This study revealed that the Amy Zone could support a high volume, low cost, long life mining operation that produces quality heavy mineral products.
  • Following a Front End Engineering and Design (FEED) Study in 2012, a Project Optimisation Study, which focused on decreasing unit operating costs, accelerating annual production of valuable heavy minerals, and increasing financial returns, was completed in 2013. Planned average ore production was increased from 17.5 million tonnes to 23.4 million tonnes per annum (34 percent increase) by incorporating an additional 29 million tonnes of ore in the southern permitted area into the Project mining schedule, and planned production of valuable heavy minerals was increased from 149,000 tonnes to 182,000 tonnes per annum (22 percent increase).  This acceleration of production reduced the total mine life from 23 years to 19 years.
  • In 2015 the Company completed a Cost Review of the Project. The Review estimated a revised capital cost of $173 million, a 14% reduction of the previous estimate. The Review also identified reduction in operating costs and other value adding opportunities.
  • The valuable heavy mineral production of 182,000 tonnes per annum will be comprised of 49,500 tonnes of zircon, 109,000 tonnes of ilmenite and 23,500 tonnes of HiTi – a blend of rutile and leucoxene containing 90% titanium dioxide.
  • All of the required environmental management plans for the project have been approved, native title agreements are in place, all of the necessary approvals for construction are in hand, and final mining approvals have been secured.  The 18-month construction period is ready to commence once financing is secured.
  • The Company is currently seeking to attract a strategic partner to help fund the project development in return for a significant equity interest and/or assured long term supplies of zircon and titanium dioxide products.

3. Products

3.1 Zircon (65% of Revenue). Forecast Annual Production 49,500 tonnes.

Zircon is a zirconium silicate, ZrSiO4, which originates in nature as an early forming accessory mineral in igneous rocks, particularly sodium-rich granites. Its hardness, high diamond-like lustre and reflectivity, corrosion resistance, high melting point and ability to absorb radiation are properties utilised in the manufacture of a variety of products in the ceramic, chemical, refractory and foundry industries. The proportion of zircon consumed in each of these industries is shown in Figure 1.

The Coburn zircon product is suitable for use in all of the above industries, although its iron oxide and titanium dioxide levels are slightly higher than the premium grade zircon cut-off levels of 0.1% and 0.12% respectively. Nevertheless, ceramic industry customers in Europe and Asia have advised that Coburn zircon can be blended with premium grade material for glazing of tiles, the principal ceramic use.

The radiation hazard level of Coburn’s zircon, expressed by its uranium and thorium (U+Th) content of between 320-450 parts per million, is quite low and compares favourably with the accepted international limit of 500 parts per million. Radiation levels in the zircon chemicals industry are particularly critical, as uranium and thorium are concentrated in the tailings during the manufacturing process, making it difficult and expensive to achieve safety requirements.

3.2 Ilmenite (20% of Revenue) Forecast Annual Production 109,000 tonnes.

Ilmenite is a naturally occurring mineral, with the chemical formula FeTiO3. It has a titanium dioxide (TiO2) content between 45% and 65% and generally pigment manufacturers pay feedstock suppliers on the basis of TiO2 content. Global mineral sands consultant TZMI classifies ilmenite feedstock with a TiO2 content between 58% and 65% as chloride ilmenite and ilmenite with a TiO2 content of 45% to 58% as sulphate ilmenite.

DuPont, the world’s largest pigment producer and the only company in the world with the technology to use ilmenite as a direct feedstock, is a major purchaser of chloride ilmenite. DuPont makes all of its pigment with the chloride process, which yields a better quality product and which is less pollutive than the sulphate route.

Coburn ilmenite averages 61.5% TiO2 and the Company has a sales agreement with DuPont for 54,000 tonnes per annum. DuPont and others have expressed interest in the remaining volume of ilmenite.

3.3 HiTi (15% of Revenue). Forecast Annual Production 23,500 tonnes.

HiTi is an approximately equal mixture of Rutile (95% TiO2) and Leucoxene (86% TiO2). Leucoxene is an altered form of ilmenite, in which the iron (Fe) has been preferentially leached out by acid groundwater, increasing the TiO2 content. The leucoxene from the Coburn Project is unusually altered and high in TiO2and, for this reason, can command a higher price and is sold in a blend with rutile. It can be used as feedstock for pigment manufacture or in welding rods.