Magnetite Mines (ASX:MGT) confirms benefits of expansion at Razorback

Magnetite Mines Limited (ASX:MGT) Technical Director Mark Eames discusses the business case for further expansion of the Razorback Iron Ore Project in South Australia from three million tonnes per annum to seven million tonnes per annum.

Lauren Evans: Hi. This is Lauren Evans for the Finance News Network. Joining me today is Technical Director from Magnetite Mines (ASX:MGT) Mark Eames. Mark, welcome back to the network, and it's nice to see you again.

Mark Eames: It's a pleasure. Thank you very much for the invitation.

Lauren Evans: Now, some of our viewers may already be familiar with Magnetite Mines. But, for those that aren't, could you give us an overview of the company?

Mark Eames: So, Magnetite Mines is an ASX-listed company that owns large scale magnetite resources in South Australia. And these resources are capable of producing a high-grade iron ore concentrate product which is in strong demand in the marketplace. And we are looking to develop a business to meet that demand.

Lauren Evans: And you've recently made an announcement about an expansion study. Could you tell us more about that?

Mark Eames: The world's great mining businesses tend to start small and grow. And we reinvigorated our project three years ago by focusing on staged development, where we essentially start small to make sure that we can have a manageable capital to start up. And then what this latest announcement does is fill in the picture by showing that an expansion, once we start, is both feasible and attractive.

Lauren Evans: Thanks, Mark. Now, I'd like to talk about the financials. But, before I do, could we talk about the carbon footprint of the iron ore industry? I understand you are taking steps to reduce the carbon footprint.

Mark Eames: Yes, we are. And if we stand back, steel is essential for the world. The world requires large amounts of steel to develop and grow. The difficulty is that steel is currently associated with a large emissions footprint. So, about 7 per cent of the world's emissions come from iron- and steel-making. And the challenge for the world is that, to make low-emissions steel, you need high-grade iron ore products. And right now in Australia, we tend to produce lower- and mid-grade iron ore products. And, over time, we need to transition towards high-grade products to reduce emissions. And that's where our project comes in. We produce an exceptionally high-grade iron ore concentrate. And because of the location of our project, our emission footprint, both in terms of our emissions where we produce within South Australia and where our customers are going to make the steel, were significantly reduced.

Lauren Evans: And could you comment on the project's financials?

Mark Eames: So, this is particularly exciting for us. So we focused, in our first stage of development, with a low capital development. So, in other words, we've aimed to get the capital down below about US$500 million for the first stage. That's important. But what we show with this release is that when we expand the project, those expansions add value. And what we are seeing with this release is that the net present value of the project is well in excess of $2 billion. And that's pretty impressive when we have a market capitalisation of around $100 million today. So, it shows that the development pathway can add significant value to shareholders.

Lauren Evans: And are there any risks to the project?

Mark Eames: We are working through a very thorough and rigorous technical program, and we are engaging with our holders at every step of the way. And that, in combination with the fact that we have a very large resource in a stable and supportive jurisdiction, is really the key to developing this project.

Lauren Evans: Great. And before we wrap up, is there anything else that you'd like our viewers to know about the announcement?

Mark Eames: Thank you, Lauren. I'd just like to emphasise that we are currently working on developing a three million tonne a year iron ore business. That's our first stage. But the purpose of this announcement is to show the benefits of actually moving to higher levels of production, in this case around seven million tonnes. And what we're doing is we're making sure that we build that optionality into the project that we build for the first stage, so that what that'll do is actually preserve that expansion pathway and ensure we can deliver that full value through time.

Lauren Evans: Mark, thank you for your time today, and all the best for the mine expansion.

Mark Eames: Thank you very much. It's been a pleasure.

Source: Finance News Network