Mineral sands developer Strandline Resources (ASX: STA) has inked a 10-year liquefied natural gas (LNG) supply agreement to power its mine development and operation in Western Australia.
Road trains will move the LNG from the Pluto loading facility — owned by Woodside Petroleum (ASX: WPL) — near Karratha to the Coburn mine site.
The LNG is being supplied by the Woodside-EDL joint venture.
Strandline said the agreement means it will get energy supplies at a lower price than that assumed in the 2020 definitive feasibility study.
‘State-of-the-art’ power system
Coburn’s power station, to be located near the mineral separation plant, will be powered by LNG complemented by solar energy, a system the company describes as “a state-of-the-art, low-cost, low emission solution, integrating gas-fuelled generation with renewable and battery technology”.
“Coburn is on the cusp of a final investment decision … with funding secured, key development approvals and offtake contracts in place, as well as major contractors appointed,” Strandline said.
Last month, the company completed its debt funding for the project with a senior secured US$60 million (A$77.6 million) bond issue, and all key development approvals and offtake agreements in place.
That includes port access at Geraldton.
Coburn, 240km north of Geraldton, has an initial 22.5 years of ore reserves containing zircon, ilmenite and rutile and is capable of supplying 5% of the world’s zircon needs.
Coburn has an estimated $260 million capital cost.
Lower cost gas and certainty of delivery
Strandline managing director Luke Graham said that, apart from cost reductions, the Woodside-EDL deal provides certainty of LNG delivery.
About 95% of planned production has been pre-sold to “highly reputable” global customers through long-term contracts, he added.
Coburn is regarded as construction-ready with a definitive feasibility study confirming robust economics and its future as a large, long-life strategic asset, the company said in a recent presentation.
Strandline’s product mix is weighted to premium zircon and high-grade titanium feedstock products that are used in ceramic tiles (50% of the market), refractory applications, paint, titanium metal and welding rock applications.
At present, China dominates the 1.1 billion-tonne-per-annum zircon market with a 47% share, while Iluka Resources (ASX: ILU) is the most influential company in setting benchmark prices.
The Coburn project was acquired about 20 years ago by Strandline, which was then listed as Gunson Resources.
Strandline also has two mineral sands projects in Tanzania.