Proactiveinvestors Australia

IRON ORE IN BRAZIL

The geology of Brazil’s land mass is not well known when compared with the large quantity and high quality of the geological studies of other countries with mining traditions, such as Canada, Australia and the United States. Despite this shortage of basic information, Brazil is known internationally for its diversity of geological environments, high volume of already identified mineral reserves and large variety of mineral products in its mineral provinces and districts.



The Earth’s largest iron reserves are composed of Banded Iron Formations (BIFs), which are altered sedimentary deposits with laminated rocks formed by alternating layers of silica and hematite-magnetite, as well as carbonates and iron silicates. The amount of iron found in BIFs typically varies from 20% to 35%, but percentages of more 55% do occur less frequently. The term “itabirite” is frequently used as a synonym for these formations, especially in the iron belt located in Minas Gerais state known as the Quadrilátero Ferrífero.

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THE NORTHERN MINAS GERAIS IRON ORE PROVINCE

The iron ore deposits in Rio do Peixe Bravo are located in northern Minas Gerais state in the regions of Rio Pardo de Minas, Porteirinha and Riacho dos Machados. This iron formation is 600 meters thick and is basically composed of diamictites and hematite quartzites. Stratigraphically these deposits are positioned in an intercalation of the Nova Aurora Formation of the Macaúba Group. There is a high probability of the existence of genetic and geochronologic equivalence between the deposits in Rio do Peixe Bravo and the abovementioned jaspilites in Urucum in the Corumbá region, given that both are Proterozoic and associated with glacial sediments of the Macaúbas Group.

The distribution of banded iron formations in the geological record is limited to an early period in the Earth's history. Radiometric dating reveals that banded iron formations were primarily deposited during the Archaean (2.5 Ga) through the Early Proterozoic (between 2.5 and 1.6 Ga) eras, their greatest development occurring between 2.6 and 1.8 Ga ago. After about 1.8 Ga ago, there was essentially no deposition of banded iron formations, except for a slight resurgence of deposition that occurred between 800 and 600 Ma ago. These younger deposits, including the Rapitan Iron Formation in north-western Canada, North Minas Gerais and Corumba in Brazil, have a distinctly different character in comparison with the older banded iron formations, suggesting that they formed under different environmental conditions. Since 600 Ma ago, no true banded iron formations have been deposited.

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BENEFICIATION OF LOWER GRADE ORES

Lower grade Iron ore cannot be used directly in metallurgical plants and needs to be upgraded to increase the iron content and reduce the impurity content. A process adopted to upgrade ore is called Beneficiation. Iron ore is being beneficiated all round the world to meet the quality requirement of Iron and Steel industries. Several techniques such as washing, jigging, magnetic separation, advanced gravity separation and flotation are being employed to enhance the quality of the Iron ore.

Due to the high density of hematite relative to silicates, beneficiation usually involves a combination of crushing and milling, magnetic separation if magnetite is present as well as heavy liquid separation. This is achieved by passing the finely crushed ore over a bath of solution containing bentonite or other agent which increases the density of the solution. When the density of the solution is properly calibrated, the hematite will sink and the silicate mineral fragments will float and can be removed.

There is a clear distinction between older banded iron formations such as the Hamersley Ranges or the Carajas deposits where production has focused on high grade direct ship ore and the younger Rapitan type deposits associated with glacial sediments where grades are often between 20% and 45% Fe. Rapitan type deposits are usually formed on hematite and chert (jasper) and in Noth Minas Gerais some deposits also contain magnetite.

Older banded iron formations generally consist of very fine grained (colloidal) chert and iron rich layers which require very fine grinding to release the valuable material.

The Rapitan ores are easily upgraded because of their coarse sedimentary structure where iron minerals and deleterious rock fragments can be separated by magnetic separation, desanding and floatation at relatively low cost.

The proposed process route will be similar to that used at the operating Alegria Mine (for example) owned by Samarco in southern Minas Gerais. Itabiritic ore is excavated by bulldozers, loaded by front-end loaders into 177t-capacity trucks and taken to a crushing and screening plant in the blending yard. The ore is blended and stored before transport by belt conveyors to the surge pile. An overland conveyor system transports the ore over a distance of 4km to the beneficiation plant at Germano.

At the Germano beneficiation plant the ore is screened, crushed and classified to feed the primary mills. This circuit assures sufficient reduction of the iron ore particles. It is then deslimed with the ultrafine material being removed in cluster cyclones before conventional flotation where waste material such as silica is separated from the iron particles. The ore is reground and enters a column flotation circuit. The resulting concentrate with a grade of 66 – 68% Fe is slurried with water for pipeline transport.

LOGISTICS AND INFRASTRUCTURE

Infrastructure in the north region of Minas Gerais is limited; therefore concentrate transport costs will require capital expenditure on infrastructure. Logistics to transport the concentrate requires an assessment to select the most suitable system that could include:

- Rail link to the proposed rail development and steel mill at Rio Pardo de Minas. This has not yet been confirmed but potentially represents a big advantage to the project. A state government study has been proposed for 2010 and the rail link has the support of the local municipalities. It is anticipated that this link will join EF334 at Aneje near Vitoria da Conqista a distance of 225 km from the port of Ilhéus.

- A new 200 km spur railway to Caetité to join the West-East railway (EF-334) which was approved by the Federal Government in January this year. The first section construction of this link has commenced and is scheduled to reach Caetité in mid 2011.

- Construct a 70 km spur railway to FCA (Vale proprietary railway), and after negotiation make use of the trackage right and install a  dedicated wharf to load the ore in Salvador, in the state of Bahia.  The city of Espinosa is serviced by Ferrovia Centro-Atlântica (FCA), and is located approximately 70 km from Rio Pardo de Minas in North of Minas Gerais This will require a negotiated agreement with VALE.
   
- Concentrate pipeline and dewatering infrastructure at the port dedicated to the system.

The West-East Integration Railroad (EF-334) is aimed at interconnecting the port of Ilhéus, in the State of Bahia, to the North-South Railroad at the city of Figueirópolis, in the State of Tocantins, passing through the grain, alcohol, cotton and iron ore producing regions located in the interior of Bahia and southeast of Tocantins.

The cargo volume to be transported by the 1,490 km of the West-East Integration Railroad is estimated at around 26 million tonnes a year in 2012 when it will be completed, and 52 million tonnes by 2018. Eight yards are being designed for the operations and manoeuvring involved in the movement of this cargo.

THE RIO PARDO PROJECT

Minas Norte Mineracao Ltda (a wholly owned subsidiary) is a  Brazilian registered company and holds a number of tenements at grated and application stages in the north of Minas Gerais state in southern Brazil.  The Rio Pardo iron ore project covers 899.0 square kilometres in 62 tenements.

Extensive canga (surficial detrital iron deposits) outcrops have been mapped in the area overlying diamictite rock units.  These are interpreted to be related to elevated hematite and magnetite accumulations in the diamictites.  A number of areas have been identified within the tenements that warrant further exploration.

The Rio Pardo de Minas tenement block straddles the northern parts of the known mineralized area in the Northern Minas Gerais iron ore province. Field examination has demonstrated the presence of iron ore and manganese mineralization within the block, with a number of major targets identified to date.

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Directors

Mr. Peter O'Connor (MA Economics and Political Science, Trinity College, Dublin; called to the Irish Bar, King's Inns, Dublin 1964) - Chairman
Mr O'Connor brings to the Company a far-ranging understanding of developed and developing markets from an over 40 year long career in international investment management. He was a co-founder, director and deputy chairman of FundQuest UK Ltd (formerly IMS Manager selection Ltd) from 1998-2008 and deputy chairman from 2008-2010. FundQuest UK Ltd is a leading research and multi -manager investment group based in London with €50 billion of assets under management or advice as at the end of 2010. Mr O'Connor is chairman of a number of publicly quoted investment companies with particular exposure to Asia, Australia and Canada, including (held through Peter O'Connor & Associates) chairman of Advance Developing Markets Fund (listed on the London Stock Exchange - US$500 million) and NEO Material Technologies Inc (a producer of rare earth/magnetic products in China and Thailand listed on the Toronto Stock Exchange).

Mr O'Connor is a Chairman of the Board's Nomination and Remuneration Committee.


Mr. Malcolm John Castle (B.Sc.(Hons), GCertAppFin (Sec Inst), MAusIMM) - Executive Technical Director
Mr Castle has over 40 years’ experience in exploration geology and property evaluation, working for major companies for 20 years as an exploration geologist. He has wide experience in a number of commodities including iron ore, gold, base metals, uranium and mineral sands. He has been responsible for project discovery through to feasibility study and development in Indonesia and the Pilbara in Western Australia and technical audits in many countries. Mr Castle was a founding member and permanent employee of Fortescue Metals Group as Technical Services Manager for expansion projects and was an integral member of the team developing the definitive feasibility study for start-up projects at Cloudbreak and Christmas Creek. He was appointed Chief Geologist for the Transcontinental Resources Group and a director of Regalpoint Resources Limited in 2010.

Mr Castle completed a Bachelor’s Degree in Applied Geology with the University of New South Wales in 1965 and has been awarded a B.Sc (Hons) degree. He has completed postgraduate studies with the Securities Institute of Australia in 2001 and has been awarded a Graduate Certificate in Applied Finance and Investment in 2004. He is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM), and has the appropriate relevant experience and qualifications to be an “Expert” and “Competent Person” under the Australian Valmin and JORC Codes respectively and under National Instrument 43-101 in Canada.

Mr Castle is a member if the Board's Audit and Risk Committee.

 

Mr. Bruce Alexander McCracken (BCom, LLB, MBA, GAICD) - Chief Executive Officer
Bruce is an experienced business executive having spent 20 years working across a broad range of industries based in Perth, Melbourne and Sydney.  Most recently Bruce was Corporate Development Director of the Kirin Group-owned Lion Nathan National Foods (previously Lion Nathan) focussing on the execution of strategic opportunities, primarily through M&A.  Prior to this, Bruce was the Group Manager, Corporate Development for the private equity owned Amatek Group.  Before working in the corporate environment Bruce spent 8 years as an investment banker based in both Perth and Melbourne in specialist corporate advisory and project finance roles and has also practiced as a banking and finance solicitor.  During his time as an investment banker Bruce worked across a broad range of corporate and financial advisory assignments, primarily in the diversified industrials and mining and resources sectors.   Bruce holds Bachelor of Commerce and Bachelor of Laws degrees from the University of Western Australia, an MBA from Melbourne Business School and is a graduate of the Australian Institute of Company Directors.  

Mr McCracken is a member of the Board's Audit and Risk Committee and Chairman of the Share Trading Committee.

 

Mr. Anthony Augustine Trevisan
During a period spanning some twenty five years Mr. Trevisan played major roles in a large number of corporate scenarios involving financing mergers and acquisitions, the restructuring of property and petroleum and mineral resources based public companies and the establishment from start up of substantial operating businesses.

Mr. Trevisan has had extensive experience in raising and structuring financial instruments to fund the development of a number of significant projects in Australia and overseas. He has been responsible for public offerings and the floating of companies on the Australian Stock Exchange and other major exchanges internationally involving well over a billion dollars. He has held senior executive positions in listed public companies with a wide range of interests including oil & gas, mining, industrial and property. These include Mediterranean Oil & Gas Plc (founder and executive director, Ombrina Mare oil discovery), Arabex Petroleum NL (founder and executive director, Rubiales oil discovery), Callina NL (executive chairman, petroleum work-over project at Komi Oil field, Russia), Acqua Vital (Australia) Ltd (executive chairman, now owned by Coca Cola), TRG Properties and the Roy Weston Group (executive chairman) amongst others. He was a founding director of Star Castle Holdings Ltd and Brilliant City Holdings Ltd and substantially responsible for their identifying and acquiring the Rio Pardo Project.

Mr Trevisan is a member of the Board's Nomination and Remuneration Committee and Share Trading Committee.

 

Mr. Robert James Pett BA(Hons), MA(Econ), FAICD, Minerals Economist
Mr Pett is a minerals economist with over 27 years' experience in exploration and mining of gold and other metals. During that period he has overseen the successful exploration, development, operation and financing of over ten mining projects worldwide. This includes gold and nickel mines in Australia and gold mines in East and West Africa, a number evolving from grass roots discovery as well as numerous exploration projects. He holds a Masters Degree from Queens University Canada.

Mr Pett is a member of the Board's Nomination and Remuneration Committee, Share Trading Committee and the Chairman of the Audit and Risk Committee.

 

Company Secretary
Ms Fleur Hudson BA, LLB, LLM(Disp. Res.)
Fleur Hudson has a Bachelor of Arts, a Bachelor of Laws and Master of Laws degrees. Fleur has been a director of Transcontinental Group since 2009 and was appointed as company secretary of Ausgold Limited in 2010. Prior to that, Fleur has practiced as a solicitor with international law firms in Perth and in London since 1998. As a solicitor, Fleur has advised large national and international companies with respects to a variety of civil construction, infrastructure and commercial issues.

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