Development Projects
Wonarah Rock Phosphate

Wonarah 2011 Drilling Results

 

Overview

The 100% owned Wonarah Rock Phosphate project is one of the two key Minemakers assets. It is Australia's largest undeveloped rock phosphate project. Indicated and Inferred resource estimates for the entire volume of the modelled phosphatic units total 1,552Mt @ 11.9% P₂O₅, a significant increase from the previous model estimates of 632Mt @ 17% P₂O₅. Using a 10% P₂O₅ cut-off, which is suited for identification of potential feed for manufacturing fertilisers, inferred and indicated resources total almost 800Mt at almost 18% P₂O₅.

Minemakers has become a cornerstone investor in JDCPhosphate, a Florida based company with a patented process to produce super phosphoric acid ("SPA"). The process seems particularly amenable to using unbeneficiated Wonarah phosphate ore and it is considered to have potential to produce SPA at relatively low operating and capital costs.

Full permitting of all aspects necessary for a DSO mining operation has been completed but a preferred option is now viewed as downstream fertiliser production: an independent recent Enabling (or pre-feasibility) Study on this has indicated suitably positive financial returns.

The Mining Agreement was signed at a ceremony in Tennant Creek on 25 February 2011 between the Executive of the Arruwurra Aboriginal Corporation, Chair and Deputy Chair of the Central Land Council, and Directors of Minemakers Australia Pty Ltd. The Agreement gives assents to the development of the massive Wonarah deposit to its eventual full potential, which includes the mining operation, beneficiation processing operation, production of fertilisers, and all of the associated infrastructure.

Of all known deposits in the Georgina Basin, Minemakers enjoys the best infrastructure position in that it lies immediately adjacent to the all-weather public Barkly Highway and is situated less than 300km from the north-south (Darwin-Adelaide) standard gauge railway with spare capacity. This would also allow Wonarah product to be transported relatively cheaply to the export Port of Darwin plans to increase capacity.

Minemakers' Wonarah project also benefits from significant Traditional Owner, Central Land Council and Northern Territory Government support. The Company's project has been granted Government Major Project Status, the only rock phosphate development with this status in Australia.

Wonarah is likely to be a significant source of local jobs and regional growth opportunities and will generate a large and ongoing royalty stream to both Government and Aboriginal interests. Minemakers views the adoption of Major Project Status by the Northern Territory Government as recognition of the potential near and long term benefits of the project.

Price Outlook and Impact

Longer term price implications include:

• Increasing demand for general food production.
• A strong increase in planting of biofuel crops and the need for additional fertilizer.
• Solid long term phosphate demand prospects.
• Demand driven by global population growth. Rock phosphate prices have been increasing solidly since demand recovery began after the worst of the impacts of the GFC has passed.

History

Discovered in 1967, previous explorers outlined very extensive rock phosphate mineralisation. Rio Tinto did sufficient drilling in the Main Zone of mineralisation to allow an initial JORC compliant Inferred Resource estimate of 72Mt at 23% P₂O₅.

Mineralisation is controlled by palaeohighs and some 12-16kms southwest of the Main Zone, outcropping mineralisation was also discovered at the Arruwurra deposit by Rio Tinto.

Mineralisation is hosted by lowermost sedimentary units of the Georgina Basin which also hosts the producing mine at Phosphate Hill to the east in the Mt Isa district. The same units host other known rock phosphate deposits and targets of lesser tonnages and grades.

Following a four month drilling programme which commenced in April 2008 of both the Main Zone and Arruwurra deposits, Minemakers announced an initial JORC compliant 461Mt Inferred Resource, which is Australia's largest JORC compliant rock phosphate resource.

Follow up programmes have steadily increased the estimated resource ase, which, using a 10% P₂O₅ cut off:

• Indicated category: 303Mt @ 18.2% P₂O₅ and
• Inferred category: 479Mt @ 17.6% P₂O₅.

In June 2011, Minemakers announced that it had entered into a non-binding MOU with NMDC Limited, India's largest mining company. Negotiations concerning a JV are well advanced.  Other companies are also showing interest.

It is intended that Wonarah and a downstream processing facility will be developed and constructed to produce about 1Mtpa of P₂O₅ annually.

Two development models were assessed in an Enabling (or pre-feasibility) Study. They were an on-site facility to produce 1.4Mtpa of SPA, and a Tennant Creek facility to produce over 2Mt of phosphate nitrogen fertilisers, such as DAP. For the latter option, Wonarah ore would be beneficiated on site and transported via a slurry pipeline to near Tennat Creek for that fertiliser manufacture.

 

The key economic outcomes for the EFS are shown in the following Table.

Scoping Study Evaluation

		DAP Fertiliser	SPA
Ore Mined	Mtpa	7.0	6.5
SPA Sold	Mtpa		1.46
DAP Sold	Mtpa	2.24
Mine Life	Years	20	20
Net Revenue	A$M	28,303	21,482
Operating Cost	A$M	17,633	11,505
Upfront Capital Cost	A$M	2,464	1,691
Cashflow Before Tax	A$M	6,981	7,359
NPV Pre-tax Ungeared (8%)	A$M	1,836	2,350
IRR Pre-tax Ungeared	%	17	24
Operating Margin	%	36	45
Payback	Years	7	6
Average Annual Revenue	A$M	1,378	1,037
Average Annual Costs	A$M	882	575
Average Annual Operating Cashflow	A$M	497	462

(Source: KEMWorks)

Mineralisation is hosted by lowermost sedimentary units of the Georgina Basin which also hosts the producing mine at Phosphate Hill to the east in the Mt Isa district. The same units host other known rock phosphate deposits and targets of lesser tonnages and grades.