by Wally Graham, Resources Roadhouse
Sheffield Resources has a few different projects, could you just quickly run through them? We have three substantial mineral sands projects, all located in Western Australia, as well as our Red Bull project, located near the Nova discovery of Sirius Resources ASX:SIR.
Our mineral sands deposits are of global significance. Our Dampier project certainly has the size and grade that rank it on a global scale.
Our McCalls project, located in the Northern Perth Basin, about 100 kilometres north of Perth is another very large deposit.
It is lower grade than Dampier but it is the largest accumulation of chloride ilmenite known in the world.
What is significant about chloride ilmenite? Chloride ilmenite is a higher-level titanium ilmenite suitable for the chloride pigment process, and there are not too many deposits of that type around.
African deposits tend to be of a lower grade ilmenite, which are not suitable for the chloride process.
How large is your Dampier tenement holding? Surrounding the Dampier discovery, in what is an under-explored are for mineral sands, we have managed to secure a large tenement holding of over 3000 square kilometres of prospective ground.
Iluka Resources recently moved in and pegged the remaining ground, approximately 8000square kilometres, in the Canning Basin.
So the big boys have recognised the real estate potential of your neighbourhood? We think it adds some credibility to our position up there.
Which is your leading project at this stage? We recently announced the discovery of the Thunderbird deposit, which has made the Dampier mineral sands project our main focus.
Next would be the Eneabba project, another mineral sands play - smaller than Dampier more advanced.
Eneabba consists of multiple mineral sands deposits, which we are evaluating with the concept of sequential mining.
We have done some scoping work there that suggests a strong economic basis for the project, so we are conducting further work there, which includes the recent addition of a new resource at the Durack deposit.
The Durack resource has added 170,000 tonnes of zircon, 824,000 tonnes of ilmenite, 65,000 tonnes of leucoxene and 33,000 tonnes of rutile to the Eneabba project resource inventory, which now stands at 5.29 million tonnes of contained heavy minerals.
You alluded earlier to a recent announcement of the new Thunderbird discovery. Is this a totally new discovery? Rio Tintohad previously run a couple of lines of drilling across Thunder bird, but apart from that it is our discovery.
We have drilled 170 holes, where Rio had previously only drilled eight holes into the main target area.
So it wasn’t a case of Sheffield going in wondering what the tenement held, you already had a fair idea of what you expected to see there? That’s right. It’s not a grassroots discovery as there were early indications from the scout drilling Rio undertook.
What exactly is the Dampier project? It is a very large mineral sands deposit that appears to have formed in an off-shore environment.
It is broad, currently measuring around four kilometres by five kilometres, which has been outlined by drilling.
It is a zircon-rich mineral assemblage grading around eight per cent, based on previous work, and if you multiply that by the average grade of the deposit it looks like itcould containhighin-situ zircon content.
It appears zircon is going to be the main targeted commodity at Dampier? At least half the value of the deposit is tied up in zircon, but it also has good quantities of ilmenite and rutile.
How does Dampier rate on a global scale? Its size and scale certainly rank it amongst the top tier of undeveloped zircon projects.
We have previously published an exploration target on the deposit of 450 to 840 million tonnes at five to ten per cent heavy minerals.
Even at the lower end of the tonnage it is still likely to have around 1.6 million tonnes of contained zircon.
Do you anticipate adding to those numbers by the end of the year? We’re currently drilling up there. Once that has been completed we anticipate getting the assays back to commence a Resource Estimate we hope to have ready around late November.
So by the end of this calendar year we should have a good idea of what that deposit contains and the quality of the mineralogy.
We’re thinking, based on the small amount of previous work that was conducted there, we will be looking at a very large resource and a zircon-rich mineral assemblage.
Once we have all that data together we will be undertaking some scoping work ahead of the next phase of drilling and metallurgical work next year.
What are mineral sands products used for? Mineral sands are industrial minerals. Zircon is used as anopacifier in ceramics such as tiles and porcelain, while ilmenite and rutile are classified as titanium minerals, which are mainly used for paint pigmentation.
So that gives us two different product streams, both of which are benign, non-toxic minerals with end-use applications aligned to the housing and construction industries.
How is the project positioned in terms of transport infrastructure? What we are modelling at Dampier is a deposit that will produce in excess of 500 thousand tonnes per annum of heavy mineral concentrate.
Transportation is reasonably simple by road train, because there are no environmental concerns with the products.
We are located between Broome and Derby, both towns with ports that currently ship,or have shipped, similar tonnages.
It is important to note that we won’t be shipping huge tonnages, as these are high-value products.
What shape is the global market for zircon, ilmenite and rutile currently in? Each one of those products trebled in price during 2011. During the early part of 2012 there has been a softening of demand as Chinese construction activity has come of its highs.
However, the pricing levels are still holding up – in other words producers are maintaining their margins, they’re just reducing their volumes.
So the markets have softened but the prices have remained at their record levels.
Does that mean you’re not as reliant on the Chinese market as some other commodities may be? They are products that are employed in everyday use, but the real driver behind their market growth has been Chinese urbanisation.
Having said that, people in other countries around the world continue to build and renovate.
Industry leaders do expect the market to tighten up later this year and in 2013 to be quite strong.
Given that our Dampier project is still at a relatively early stage of evaluation, we are more concerned about how the market may appear in 2015 – 2016.
Your projects are a good demonstration of the diversity of Australian mining in that they show there are more than one or two commodities driving the industry? The mineral sands sector is relatively small with only about 30 players globally.
It is dominated by a few large players with Rio Tinto and Iluka being amongst the largest. Iluka is solely focused on mineral sands, while the others are more diverse.
Iluka is a good bell weather of the strength of the mineral sands industry as they set the pace – especially in regards to zircon.
They had a record year last year. They have come back a bit since but that has mainly been due to their exposure to the short-term softening of the zircon market.
