Sydney, Dec 18, 2007 AEST (ABN Newswire) - Atlas Iron Limited (ASX: AGO) is pleased to report on the completion of a Scoping Study on its Abydos Direct Shipping Iron Ore (DSO) Project, located approximately 120 kilometres south-south-east of Port Hedland in the Pilbara of Western Australia. Key outcomes from the conceptual mining study include:
SCOPING STUDY
The Abydos Scoping Study was project managed via Atlas' consulting engineers, Engenium, utilising specialist sub-consultants including:
-----------------------------------------------------Resource Estimation CSA Australia Pty LtdEnvironmental Permitting Coffey Natural Systems (formally Enesar)Iron Ore Marketing Warwick DaviesSite Layout EngeniumHydrological Assessment MWH AustraliaFlora Greg Woodman and Associates-----------------------------------------------------
The results from the Scoping Study are consistent with Atlas' stated objective of establishing a second DSO operation in the Pilbara, exporting through Port Hedland and building production to 6mtpa. As a result, Atlas' board has endorsed the progress of the Abydos DSO Project to the Pre Feasibility Study (PFS) phase, due for completion by July 2008.
Development Schedule
Subject to achieving environmental approvals in line with statutory guidelines, the Company plans to commence shipping iron ore from Abydos in the second half of calendar 2009. The company is targeting production at an initial rate of 3Mtpa.
"Given that we found 8.6 million tonnes over the first 6 months of exploration, we feel comfortable that we should be able to define the 15 million tonnes required to commission a 3 million tonnes per annum project within 18 months," commented David Flanagan, Atlas' Managing Director. "The Abydos Project hasfantastic exploration potential and we look forward to drilling a lot more holes and reporting on those results during 2008."
Infrastructure
Atlas has previously signed a Memorandum of Understanding (MOU) with Fortescue Metals Group concerning the use of the FMG rail and Anderson Point ship loading facilities, for both its Pardoo DSO Project (upon commencement and until commissioning of the public access berth at Utah Point) and Abydos Projects. Negotiations with FMG in relation to port and rail access are ongoing.
The Abydos Scoping Study has considered the various project component capital costs for commencement at 3Mtpa. Access to the Abydos site necessitates crossing the Turner River, a significant drainage channel during cyclonic and occasional high rainfall events.
In light of this, a A$15M dollar allocation has been provided within the Abydos Scoping Study capital expenditure estimates to ensure adequate access across the river. This aspect of the site's capex will be analysed further during the PFS. In addition, a 100-man camp is provided for within the capex estimate to facilitate continuous shift operations. Atlas' intention is to continue to employ its core Pilbara management and administration personnel from a Port Hedland base.
In addition to the strategic advantage of its location only 120 kilometres from Port Hedland, the Abydos Project lies adjacent to Great Northern highway. The combined benefits of all the available infrastructure provides Atlas with significant advantages in terms of lower capital and operating costs, options for haulage as well as reduced time to production.
Operations
It is proposed that the Abydos Project will utilise contractors to maximise flexibility and minimise the capital costs at the commencement of the Project. The Scoping Study has estimated the Project's operating cost base; and in conjunction with marketing estimates for Abydos DSO products, operating margins of between $A15 and $A35 per ore tonne are expected. Price inputs have been based on the May 2007 CRU iron ore price forecasting model.
Wherever possible the company seeks to actively engage with the community and local stakeholders.
Atlas' intention is to continue to support the local Port Hedland community during the exploration and development of its northern Pilbara projects.
Exploration
Preliminary project access agreements have been established with the traditional landowners within the project area, the Njamal people. Atlas is now actively engaged with Njamal to establish the project's ongoing exploration and mining land access agreement.
Atlas will continue to invest in a significant ongoing exploration effort at the Abydos Project, given its confidence in the capacity of the Abydos Project to deliver substantial resources and reserves over time. The company's well funded and expanded exploration team will further accelerate ongoing exploration in anticipation of further commercial discoveries.
Reserve Estimation
Atlas has not yet reported 15mt of resources or ore reserves from its Abydos Project. While the company remains optimistic it will report reserves in the future, any discussion in relation to production targets, reserves or 'ore' is only conceptual in nature as there has been insufficient exploration to define a Mineral Reserve and it is uncertain if further exploration will result in the determination of a Mineral Reserve.
Geological Data, Interpretation and Resource Estimation
The information in this report that relates to exploration & resource results is based on information compiled by Mr Mark Gunther who is a member of the Australian Institute of Geoscientists and Mr Hamish Pescini & David Williams who are members of the Australasian Institute of Mining and Metallurgy. Mark Gunther and Hamish Pescini are full time employees of Atlas Iron Limited and David Williams is a full time employee of CSA Australia Mark Gunther, Hamish Pescini & David Williams have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mark Gunther, Hamish Pescini and David Williams consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.
About Atlas Iron Limited
Atlas Iron Limited (ASX:AGO) is an independent Australian iron ore company, mining and exporting Direct Shipping Ore (DSO) from its operations in the Northern Pilbara region of Western Australia. Since listing on the ASX in late 2004, Atlas has grown rapidly and is now a member of the ASX100 index.
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