TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH IRONCLAD MINING LIMITED (ASX:IFE) EXECUTIVE DIRECTOR, IAN FINCH.
Ian, welcome to FNN. Could you start by introducing IronClad Mining Limited (ASX:IFE)?Ian Finch: IronClad Mining is strictly an iron ore development company, I say development but it’s very shortly to be in production. It was spun out of the company Trafford Resources as an iron ore company and development company in 2006. The flagship projects are in South Australia, indeed that part of South Australia which was known for its history of iron ore around west of Whyalla, and so forth.
The place is, the actual mine site will be just north of Kimba, about 40 kilometres north of Kimba at the top end of the Eyre Peninsula. And we’re having good relations with the people of Kimba on that basis.
Thanks Ian, so who’s on the Board?Ian Finch: We’ve got a great Board, it’s a small but very, very effective and as I like to say, with over a hundred years accumulative experience. So apart from myself who’s got at least ninety-nine years of that experience, the other guys are Neil McKay who used to be the Company Secretary and Chief Financial Officer for Portland Mining, an iron ore company. And Peter Rowe, who is an operations manager ex-Anglo American, and was responsible for the operation upgrades at The Big Pit in Kalgoorlie and Boddington, down south in West Australia. So what he doesn’t know about operations is not worth knowing.
Now to your Wilcherry Hill project, 105 kilometres from the steel industry at Wyalla in South Australia. What’s the size of the project and what does it contain?Ian Finch: Well that’s an interesting question because we deliberately didn’t drill the whole of the ore body out. What we saw was the
opportunity to go into production early and therefore we curtailed our drilling. So what we have to date is at Wilcherry Hill, about 70 million tonnes of material and at Hercules the adjoining project, about 200 million tonnes of material. But that can be greatly expanded once we get into production.
Okay what’s IronClad’s stake in the Wilcherry Hill project?Ian Finch: It’s an 80:20 joint venture. In other words IronClad has earned 80% from the originators, that is Trafford Resources and Trafford Resources retains a 20% interest in the project. At the same time Trafford Resources currently holds around 36% of IronClad Mining.
So what’s taking place now at Wilcherry Hill and what’s planned for the first half of next year?Ian Finch: Okay what’s taking place at the moment is not an awful lot because we’re awaiting the approvals. I mean as most people would know, until the approvals are given by the Government, we can’t scratch the surface. However, we are in the process of building a $5 million camp for the employees, we can do that because that’s in the bounds of the township of Kimba. And that has been with the cognizance and the understanding of the Shire of Kimba and it works very well for both parties. And we’re also straightening up a few roads and doing some early works there. But on site itself, we’re waiting and itching to get going.
And what’s the potential for an upgrade?Ian Finch: Very significant. Our independent consultants SRK have given the Wilcherry Hill upgrade a potential of around about 600 to 700 million tonnes. And if you go over to Hercules, that has an upgrade potential of about 2 billion tonnes. So we’re looking good going into the future.
Okay so you mentioned approvals before. What progress are you making in securing them?Ian Finch: Well it’s been a long – they always are a long and arduous process and we spent some two years on the environmental studies and so on. We have ticked off the Native Title issues. All of the issues were ticked off and in January last year, sorry I beg your pardon, January this year, we lodged it with the South Australian Government. And I understand their approval for the Mining Licence is imminent, thereafter we have to give them a proposal for a rehabilitation programme. We’ve already completed that, but we can’t give it to them until they give us the Mining Lease.
So when are you expecting them?Ian Finch: Oh that should be about another two to three months’ process. So by the end of the year, we should have all our approvals in place.
And when do you expect to be in production?Ian Finch: Okay, when the approvals are completed, we will be rolling the mining fleet and the processing plant in. It’s a very simple processing plant; it’s a very simple mining fleet. So we don’t expect a huge construction time, probably only a month or even less than that, before we start accumulating a stockpile of ore.
Now to your recent announcement regarding port access. What have you secured?Ian Finch: That’s a very exciting concept for us and we’re working on it together with a company called Sea Transport. And in year three, we’ll be introducing a floating harbour. It’s a prototype, it will be – although floating harbours have existed around the world before, this will be quite unique and customised for the iron ore industry. So that will come in in year three, around about the same time we’ll be upping our throughput.
And what capacity do you plan to ship?Ian Finch: In that year three, we’ll be able to go up to the 4 or 6 million tonnes, the Capesize ships themselves carry about 150,000 tonnes per load. The floating harbour will store on board 100,000 tonnes of ore and we’ll have two customised feeder vessels, which will also feed up to 12,000 tonnes per day each into that. And we’ll be able to turn around these massive ships in about four days.
Now you mentioned port access in three years. So are you targeting 2015?Ian Finch: Approximately yes, but in the meantime we have plan A and plan B before we get to the floating harbour. We’ll be shipping ore via a tug and barge, we’ve already purchased the tug, the barge is on order and being built in China. And that tug and barge will ship to Panamax, slightly smaller vessels, around 70,000 tonnes and that will be shipped as I said, by tug and barge for the first two years.
So when do you expect to make your initial shipment?Ian Finch: The initial shipment should be going out around by the end of the first quarter next year.
Great now you have another project Hercules, 15 kilometres east of Wilcherry Hill. What’s taking place there?Ian Finch: Hercules is a massive outcropping iron body, in fact it used to be called Iron Ridge and it’s not too far away from the old Iron Knob. I think everybody at school would have learnt about Iron Knob. In fact it’s been shipping top class iron out of South Australia for a hundred years and still is today. This is part of that system geologically speaking and we started drilling down the southern end of it, and we drilled around 200 million tonnes of material. But that was one way of using our money up very quickly, so we stopped there. Now when we get into production, that drilling will commence again and we see at least 1.5 to 2 billion tonnes of ore there. So the life span of our mining operations is long.
Now to your financials. Are you funded for next year?Ian Finch: Not at this point in time. The reason for that is again, to some degree, the approvals - the Mining Lease approvals provide the collateral for the banks. And we’re also doing it a little bit unconventionally, in that we are going for almost pure debt finance for this relatively low cost capital starter. Capital costs will be around under $30 million which may make a few people shake their heads, but it is what I say it is, it is under $30 million to get us kicked off in this. And we have something like twelve or thirteen banks awaiting finalisation of our financial model and are awaiting the Mining Lease approvals. So we expect that to be done later on this year.
Thanks Ian. Now even at this early stage, are you talking to potential customers about Off-take Agreements?Ian Finch: We’ve already locked into place the 2 million tonnes a year for the next two years. Now we could have locked it in a lot longer, but we wanted to see how the Agreement went with OM Holdings out of Singapore, it’s there trading iron. So they have the rights to ship 2 million tonnes per year, for which they get paid a handsome fee.
Finally Ian. Where would you like to see IronClad Mining this time next year?Ian Finch: This time next year, we should be well on our way to our first million tonnes of ore. When you consider that there’s something in the region of $50 to $55 margin per tonne of ore, we should be well on our way to a $50/55/60 million profit. And that will start to fuel the ongoing growth of the Company and that’s what I’m really looking forward to.
Ian Finch, thanks for introducing IronClad Mining.Ian Finch: It’s a pleasure.
ENDS
