Shree Minerals (ASX: SHH) has reached a major milestone with a decision by the Tasmanian Environment Protection Authority (EPA) to issue approval conditions for the company’s proposed magnetite and hematite mine at Nelson Bay River, in northwest Tasmania.
The NBR Project area is located about 6 kilometres north east of the town of Temma and about 70 kilometres South West of Smithton, in north west Tasmania.
NBR project has a JORC iron resource of 11.3 million tonnes including goethitic‐hematite resource of 1.4 million tonnes and magnetite resource of 7.8 million tonnes.
During the March quarter, the DSO resource for NBR increased by 55% to 450,000 tonnes at an average grade of 57.8% iron and 700,000 million tonnes of beneficiable goethite-hematite.
The company’s chairman, Sanjay Loyalka, said that "the EPA Board’s decision comes after a very long and rigorous assessment process to confirm that the mine will proceed in accordance with best practice environmental management.
"He said this included measures to prevent acid drainage, to protect and enhance wildlife habitat and to minimise the risk of roadkill by confining product transport to daylight hours.
Loyalka said that his company was excited about the prospects of developing the mine after the remaining approvals have been obtained.
Perhaps the main point is that the actual "footprint of mining" is very small in relation to the economic benefits that can be obtained and represented a balanced approach to land management.
The EPA has provided its conditions to Circular Head Council. Council must include those conditions in its planning permit if it approves the development application for the mine. Council’s assessment process can now proceed to completion.
Shree Minerals is also waiting on the Commonwealth’s separate approval decision.
The iron mineralisation at NBR is hosted by a 10 to 28 metres wide mafic dyke, which crosses cuts the country rocks and increases in width with depth. Within this dyke is a magnetite‐rich section and oxidation of the magnetite has generated goethite‐hematite mineralisation to varying depths.
Mining of DSO material will generate strong cash flows and transform Shree Minerals from explorer to profitable producer.
The hematite ore is similar to ore found in Western Australia's Pilbara region; low alumina and a premium product easy-to-extract, with little financial or execution risk.
Mining of DSO material is likely to have a CAPEX cost only around $4-$6 million and using contractor mobile mining and crushing would only take between three to four months to set-up.
At current Lump and Fines prices, the DSO output from Nelson Bay is expected to generate $10-15 million in annual cash flows for Shree Minerals.
With current market capitalisation at less than $9 million, this under-valuation will look acute in time.
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