Motivated by recovering iron ore prices, Strike Resources (ASX: SRK) has announced a maiden resource for its Paulsens East iron ore project in Western Australia and aims to fast-track its development within the next nine months.
The Perth-based junior today reported a maiden JORC inferred mineral resource at the Pilbara project of 9.1 million tonnes at 63.4% iron, 5.6% silica and 3.2% alumina.
The estimate was based on data from two drilling campaigns totalling 66 reverse circulation holes for 3,537m and an extensive rock chip sampling program.
According to Strike, about 2Mt of the resource outcrops at surface in a 3km-long ridge feature, making it potentially “able to be mined with minimal overburden”.
“Such an operation could be undertaken relatively simply using shovels and trucks, with the material then to be crushed and screened on site prior to transport by road to a suitable port facility for export,” the company stated.
It also noted there was potential to extend the resource about 2km further along strike.
Strike managing director William Johnson said the Paulsens East resource “confirms the presence of a well-located significant occurrence of high-grade potentially direct shipping iron ore”.
“We believe we can fast-track this asset to development in the next six to nine months and generate potential significant cashflow in this strong iron ore price environment,” he added.
Iron ore refocus
In addition to Paulsens East in WA, Strike owns the high-grade Apurimac and Cusco magnetite iron ore projects in Peru.
It is also developing some lithium and graphite projects, including the highly prospective Solaroz lithium brine asset in Argentina that it acquired in March.
The company had not progressed development of its iron ore projects due to the falling iron ore price between 2011 and 2015.
However, last month, Strike said resurgent prices made it “appropriate to now re-examine the market potential of its iron ore assets” and in particular, “examine the potential for one or more of its assets to provide an early cashflow opportunity for the company”.
The company plans to undertake an economic study at Paulsens East to examine the potential for a direct shipping ore mining operation, targeting the 2Mt of outcropping 62% iron mineralisation and using contract mining, crushing and transportation by truck to port, then shipping to China.
Strike has started the process to convert its current retention licence at Paulsens East to a mining lease and commenced discussions with operators of nearby port and shiploading facilities.
In its maiden resource announcement, the company said it will now also initiate talks with mining, crushing and transport operators, as well as potential offtake partners.
Strike has also completed a share placement of 21.8 million shares at $0.045 per share to raise $981,000 to be used to accelerate the study and approvals processes at Paulsens East.