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Murchison Metals

Murchison Metals and Mitsubishi increase iron ore resources at Jack Hills to 1 billion tonnes

Murchison Metals (ASX:MMX) has advised that total iron ore resources at the Jack Hills Iron Ore Project in Western Australia are now estimated to exceed one billion tonnes, confirming the world-class status of the project.

The Jack Hills Project is owned and operated by Crosslands Resources.  Crosslands is owned as to 50% by Murchison and 50% by Mitsubishi Development Pty Ltd (“Mitsubishi”), a subsidiary of Mitsubishi Corporation of Japan.

The confirmation of the scale and high quality of the resource represents a significant boost for the proposed Stage 2 expansion of the Jack Hills Project to make it the premier large-scale, long-life iron ore producer in the mid-west region of Western Australia.

The Jack Hills Resource now stands at:

- 96 Mt @ 58.7% Fe Direct Ship Ore (DSO)
- 991 Mt @ 34.1% Fe Beneficiation Feed (BFO)

Crosslands is targeting a large volume combined DSO-BFO operation that produces a mix of high value iron ore products for existing and new customers in North-East Asia. This interim resource reflects the results of 176,000m of diamond and reverse circulation drilling (total 820 holes) focused on the Mt Matthew, Saddle, Silver Spur, Mt Hale and North East Ridge areas.

Murchison notes that this is an interim resource increase only, with results from the Brindal zone yet to be incorporated into the orebody model. Drilling is also continuing to test extension of the existing resources, including at the North East Ridge, Brindal, Silver Spur and Mt Hale zones. While the DSO resource is sufficient to support a significant expansion of the existing high-grade direct ship operations at Jack Hills, the large BFO resource has been independently assessed as one of Australia’s highest quality and commercially attractive magnetite development opportunities.

The increased size of the orebody should also enable a significant improvement in the ratio of waste to ore, resulting in reduced mining costs per tonne of product. Additionally, the Jack Hills orebody is characterised by extremely low levels of alumina and phosphorous, the biggest source of concern to steelmakers, and relatively high levels of magnesite (MgO). Magnesite is often added to pellets or sinter feed by steel makers to improve blast furnace performance, potentially making Jack Hills products even more attractive to customers.

ProMet has also demonstrated the potential to simply upgrade transitional “near DSO” grade hematite averaging between 45% Fe and 55% Fe to produce additional saleable product.

Murchison Managing Director Trevor Matthews said the upgraded resource estimate and metallurgical results clearly demonstrated the potential of the Jack Hills project to underpin the development of the iron ore industry in the mid-west region for many years to come.

“These extremely positive results further prove that Jack Hills has the scale and quality to become the premier large-scale iron ore development in the mid-west, and we look forward to bankable feasibility studies for the Stage 2 expansion being completed over the next 12 months,” said Mr Matthews.
 
“With Jack Hills underpinning Oakajee Port & Rail’s parallel development of port and rail infrastructure in the region, Murchison is well placed to become one of Australia’s leading independent mining groups.”

Oakajee Port & Rail (OPR), in which Murchison and Mitsubishi each hold a 50% economic interest, was appointed by the State Government of Western Australia as its preferred developer of the Oakajee deepwater port in July 2008. OPR and the State Government are now finalising a Development Agreement to provide a formal framework for the development of the Oakajee port and associated rail infrastructure for the mid-west region.

Murchison Metals was trading at 60 cents.