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Shree Minerals's Australia's newest iron ore producer, ships this month

Last updated: 08:14 16 Jan 2014 AEDT, First published: 09:14 16 Jan 2014 AEDT

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Shree Minerals (ASX: SHH) is poised to load its first shipment of about 42,000 tonnes of iron ore from its Nelson Bay River Iron Project in Tasmania on 25 or 26 January 2014.

This follows the installation of requisite infrastructure and all necessary contractual arrangements to produce DSO iron ore as well as transportation of product for storage and loading at Burnie port.

There is currently 41,000 tonnes of product at the port and another 15,000 tonnes at mine site.

The first cargo is expected to consist of about 60% iron ore lumps and 40% iron ore fines.

The company said it is proud to have achieved the development of NBR from discovery to production at benchmark capital costs & time.

Nelson Bay River

Nelson Bay River is located about 70 kilometres south-west of Smithton in north-west Tasmania and 7 kilometres north-east of the coastal town of Temma.

Shree started mining in November 2013 the DSO South Pit, which has total Resources of 650,000 tonnes at 56.7% iron.

Overall Resources are 870,000 tonnes at 57.7% iron

The second stage involves the continuation of mining of the second open-cut situated above the main magnetite orebody.

The hematite oxide cap consists of the central DSO ore section mined in stage one which is surrounded by lower grade ore considered to have potential to produce a commercial beneficiated oxide product.

After that it is onto production of BFO material, and then the magnetite resource in this way the mine lift at NBR is a very solid 9-10 years, exploration could increase this time frame.

Low operating costs

NBR has C1 Costs FOB of $59 a tonne, comprised of site costs of $27 a tonne and off-site transport & port of $32 a tonne.  Add in about $21 a tonne for shipping and total cost is $80 a tonne. 

This provides a very handy buffer and a healthy profit margin at current and forecast iron ore prices.

Analysis

Shree is just weeks from shipping its first cargo of Nelson Bay River iron ore, which will in turn start cash flow for the company.

Its market capitalisation of $16.79 million leaves the company significantly under valued.

This will change.

 

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

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