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Shree Minerals Limited

Shree Minerals could commence iron ore mining at Nelson Bay in 2011

With a resource grade under the belt, and positive geological and geophysical studies, Shree's Nelson Bay project could be producing a beneficiable DSO product by 2011.

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Shree Minerals (ASX: SHH) has upgraded the global iron resource estimate at its fully owned Nelson Bay Iron Ore Project in Tasmania to 12.7Mt at 36.1% Fe including magnetite resources and goethite-hematite resources, and believes the project has potential to produce Direct Shipping Iron Ore (DSO).

The upgrade represents a 14% increase in magnetite resources, part of which have changed to Indicated category.

In addition, there is a new goethite-hematite Inferred Resource of 1.2Mt containing 0.5Mt of DSO at an average grade of 57.8% Fe and 0.7Mt of Beneficiable goethite- hematite.

Geological and geophysical studies suggest further potential for DSO, Beneficiable goethitic-hematite material and magnetite resource in the project.

The present estimates are made by the independent geological consultants Hellman & Schofield Pty Ltd and are reported according to the JORC Guidelines, based on information from 24 diamond holes, drilled for 2,512.96 metres.

The company carried out upgrading of access tracks and clearance of drill site pads for the 2010 diamond drilling and other feasibility study works earlier in the year.

The Nelson Bay Iron Project includes two contiguous licences, EL 41/2004 and EL 54/2008 and cover areas of 50 km2 and 42 km2 respectively. The Project areas are located about 5 km east of the town of Temma and about 70 km southwest of Smithton.

Access to the tenements is via the Temma and Heemskirk sealed road and thereon via maintained forestry tracks.

The iron mineralisation at Nelson Bay River Iron Project (EL41/2004) is hosted by a 10 to 28 metres wide mafic dyke, which cross-cuts the country rocks and increases in width with depth.

Within this dyke is a magnetite-rich section and oxidation of the dyke by weathering has generated near surface goethite-hematite mineralisation.

The DSO has the potential to be produced with very low deleterious elements and Iron Ore product (Fines & Lump) from the Beneficiable goethitic-hematite iron resource.

In addition, the project could provide Magnetite concentrates suitable for Dense Media separation in coal washery and high-grade Blast Furnace pellets.

Recent Davis Tube Recovery results from the 2010 drilling show improved magnetite concentrate grades over previous results.

With the encouraging exploration results the company intends to pursue its objective of completing processes to make application for various approvals in early 2011 to commence mining operations later in the year.

Requisite Environmental & Engineering studies are well advanced in this regard.

With the DSO and Beneficiable Goethitic-hematite Iron resources being near surface, the company has had discussions with appropriate mining contractors & believes it can start mining operations within few months of obtaining regulatory approvals.

The company has also submitted an application for approval for a further drilling program aimed to extend DSO resources to the south of the current resources and upgrade the category of the current inferred Goethite-Hematite Resources.

The drilling work is anticipated to commence in early 2011.

SHH has a market capitalisation of A$13.11 million and had A$3.1 million at the end of the June quarter.

Quick facts: Shree Minerals Limited

Price: $0.01

Market: ASX
Market Cap: $3.65 m
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