Magnetite Mines Going Strong Post Consolidation and Strategic Rebranding In 2019

  • Dec 04, 2019 AEDT
  • Team Kalkine
Magnetite Mines Going Strong Post Consolidation and Strategic Rebranding In 2019

Based in Wayville, South Australia, Magnetite Mines Limited (ASX: MGT) is an emerging mining company with projects situated in the Braemar region - an emerging iron ore mining area.

This junior explorer is trading at a lower valuation than its peers, as highlighted by the management at the AGM held on 29 November 2019.

Source: Company’s Report

A Walk-Through Magnetite Mines’ 2019 AGM

Chairman Mr Peter Schubert in his welcome note, while mentioning 2019 as a very busy and productive year for MGT, said;

The company made several key developments during the year 2019, as discussed below:

  • The Board successfully negotiated amended terms for redeemable convertible notes held by the liquidators of Mintech Resources Pty Ltd, which in effect
  • reduced the face value of the notes;
  • reduced the annual interest payable by the Company on the notes; and
  • extended the maturity date to 31 August 2023;
  • The Company secured a four-year, Australia-wide exclusivity arrangement with NextOre Pty Ltd for the use of their Magnetic Resonance ore sorting technology over magnetite across Australia.
  • The technology has the effect of improving mining grades by pre-concentrating the magnetite ore that will be subject to processing, whilst rejecting significant tonnages of low-grade material to tailings via a diversion method;
  • The Board believes that the NextOre technology could be transformational for the Razorback Iron Project and potentially the entire magnetite sector;
  • Once proven, it will be a step-change for processing all magnetite ore, not just ore from its Razorback Project;

Figure 1 Ground-breaking Ore Sorting technology (Source: Company's Report)

  • Mr Eames has been of great assistance to the Company in terms of engaging with the potential investors and potential suppliers, and gaining crucial information from these meetings for finalising the Scoping Study and associated Preliminary Economic Assessment.

Further, the Chairman mentioned that a big part of the Company’s strategy in 2019 was targeted towards attracting an individual with the calibre and experience of Mr Mark Eames, an accomplished and highly qualified mining professional with extensive international experience across a range of commodities.

What Differentiates Razorback From Other Magnetite Projects?

The company is making speedy progress at the Razorback Iron Project, with the following advantages:

  • Existing rail, port and power infrastructure providing low capital cost;
  • Soft magnetite ore with simple flowsheet providing premium product (68.5% Fe with ~3.3% SiO2) potential for high and competitive margins;
  • Located in a mining friendly jurisdiction, providing low sovereign risk;
  • 3.9 billion tonne resource close to the existing infrastructure.

Glance through MGT’s Strategy

Amidst the difficult times for junior mining companies to raise funds for exploration or development, MGT aimed to redefine the scope of the Razorback Iron Project with the achievement of the following objectives.

  • review of technological developments that could improve the economics of the project;
  • dramatically reduce the capital requirements to develop the project; and
  • deliver a Scoping Study for the redefined project that would guide development and be a marketing tool in the promotion of the project to potential development partners.

Over the next quarter, MGT aims to capitalise on this continuous interest by presenting a variety of investment options directly to potential local and international project partners, with the terms of the investment options currently in the pipeline.

Lucrative Market Opportunity - Steel Production In China Hitting Record Levels

  • Chinese steel production at record levels, iron imports lagging;
  • Narrowing the gap in Chinese steel production and iron ore imports;
  • No data to suggest additional supply to meet growing demand for iron ore;
  • ~1.6 tonnes of iron ore required per 1 tonne of steel;
  • Strong, sustainable demand for new iron ore sources.

Figure 2 Source: Company's Report

Whats Ahead?

MGT plans following key initiatives for the year 2020 -

  • Communication to potential investors;
  • Undertake drilling campaign targeting highest grade*, shallow ore zones and increase geotechnical understanding for pit design and processing plant placement and design;
  • Undertake detailed water study to prove -up supply, borefield design and costing*;
  • Complete processing plant design and costings*;
  • Ore sorting bulk trials;
  • Undertake PFS with lower-capital intensity option*;
  • Commence permitting of the project;

* Pending finance

Management’s Closing Commentary

Towards the end of his address, the Chairman said:

“I wish to thank my fellow Board members, Frank and Mal, our Strategic Advisor, Mr Eames and our staff for the collective contribution and progress we have made over the past year”.

“I know the team will continue to work hard and diligently over the coming year in pursuit of our revised strategy and vision to see the Razorback Iron Project exporting high-grade iron ore concentrate to the World. We look forward to an exciting year ahead”.

“Finally, I’d like to acknowledge you, our shareholders, and thank you for your ongoing support during a transitional year for the Company”.

MGT stock last traded on 29 November 2019 at a closing price of $ 0.005 with a market capitalisation of $ 4.31 million.

With critical iron ore resources in low sovereign-risk jurisdiction, open-access to existing port, road, rail and power infrastructure, conventional processing/beneficiation flowsheet with technology upside, and low enterprise value/resource tonne, MGT strongly believes that the study work in the upcoming year would be a transformational catalyst for growth and re-rating.

Figure 3 Source: Company’s Report


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