sherwin iron limited abn 98 009 075 861 for personal use ... · mining activities and capital works...

SHERWIN IRON QUARTERLY REPORT

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Sherwin Iron Limited

ABN 98 009 075 861

Roper River Iron Ore Operations and Projects

Quarterly Report

Quarter 1 2014

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1 Executive Summary

Mining activities and capital works programs continued throughout the quarter, despite significant interruptions in February and March due to adverse weather conditions. The bulk of the waste material was removed in stage 4 of the pit, exposing the remaining high grade and medium grade ore. Mining activities recommenced in March, and it is expected that extraction of all remaining ore material will be completed in late April. Progress continued on site infrastructure during the quarter with the first 32 rooms (stage 1) of the Sherwin camp completed and personnel scheduled to relocate during week 1 of April. All electrical reticulation to all rooms, water and waste water reticulation to/from all rooms, installation of the septic waste system, walkways and decking adjacent to rooms was completed during the quarter. Underground services required in stage 2 (additional 32 rooms) was also completed, with the remaining services in stage 2 scheduled to be completed in Q2. Final works including verandas, walkways and access pathways (between buildings and the mess are also scheduled for completion in Q2.

Following damage to the main access haul road in February due to flooding, culvert piping was delivered onsite during March in preparation for repairs to the main mine site haul road. A bypass road was built to provide access to site, including access for road trains carting ore, which shall be removed once the main haul road is re-constructed.

Ore trucking was hampered during the months of February and March due to persistent rain forcing closure of the Roper Highway, delays getting supplies (including fuel and parts onto site) and damage to sections of the mine haul road and Roper Highway due to flooding. Approval to recommence trucking was received from Dept. of Main roads on 16th March, but on a limited capacity due to road repairs being completed and persistent rain causing hazardous road conditions.

Progress continued on the mine plan and schedule throughout the quarter with additional grade control drilling completed in stage 4 of the pit to close off the wireframe model, and resource drilling commencing in stage 3 of the pit to be used in generating the wireframe model in the next mining area. Delays in recommencing mining activities in stage 4 of the pit resulted in significant changes to the production schedule. Production and transport schedules and the shipping schedule (allocation of Laydays) were constantly being revised during the quarter due to the significant interruptions to the mine production. Work continued on preparation of the short term schedule forms part of the medium term 18 month production schedule (reviewed and revised on a rolling 3 monthly basis) and ultimately the Life of Mine plan. Resources were employed to focus on completion of the Mine Management Plan (MMP), including the many environmental projects to be included in the final submission to be approved by the Department of Mines and Energy.

Safety remained paramount for the company and efforts continue on the preparation of site safety policies and procedures. Incidents were reported during the quarter which was investigated onsite. The most serious incident involved a road-train on the Roper Highway making contact with a vehicle parked on the side verge of the highway, waiting for the road train convoy to pass. No injuries resulted, but stricter conditions for travel on the Roper Highway have been implemented.

Subsequent events to the reporting period include:

All documentation relating to Native Title agreements have been executed by Sherwin and the Native Title holders.

Additional information has been requested and provided to the EPA.

The 3rd Shipment has been booked for mid-May.

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Reconnaissance drilling has commenced at Mt Scott.

Discussions continuing with GWA (rail operator) for early access to its rail network.

Table 1-1 Physicals Overview – Quarter 1 2014

Physicals Overview – Quarter 1 2014

This Quarter Project To Date

Tonnes Fe% Tonnes Fe%

Mining

High Grade 11,352 58.90 225,874 58.90

Medium Grade 8,272 54.90 62,788 54.90

Low Grade 44,836 54.70 107,162 54.81

Mineralised Waste 184,932 600,248

Waste 212,564

1,157,860

Total Production 461,956

2,153,932

Crushing

High Grade Lump 4,972 57.51 52,617 57.34

High Grade Fines 13,705 58.80 187,373 59.41

Medium Grade Lump 7,707 57.08 8,905 57.01

Medium Grade Fines 15,104 57.23 20,181 57.25

Total Crushing 41,488 57.75 269,074 58.76

Haulage to Mataranka

Lump - - - -

Fines 34,376 57.53 181,376 59.07

Total Haulage to Mataranka 34,376 57.53 181,376 59.07

Haulage to Darwin

Lump - - - -

Fines 18,217 59.39 149,470 59.43

Total Haulage to Darwin 18,217 59.39 149,470 59.43

Shipping

Lump - - - -

Fines 60,015 58.24 131,132 59.09

Total Shipping 60,015 58.24 131,132 59.09

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Table 1-2 Stockpile Closing Summary – Quarter 1 2014

Stockpile Closing Summary – Quarter 1 2014

Tonnes Fe%

ROM

High Grade - -

Medium Grade 41,125 55.50

Low Grade 65,282 53.40

Mine

Lump 34,601 55.80

Fines 8,254 56.60

Mataranka

Lump - -

Fines 35,969 56.60

Darwin

Lump - -

Fines 10,113 58.0

Table 1-3 Forecasted Total Mining Inventory and Shipping Product for Life of Bulk Sample Pit (BSP)

Forecasted Total Mining Physicals for Life of Bulk Sample PIt

Tonnes Fe%

Crushing Feed Schedule

High Grade 120,048 58.6


Total 199,931 57.4

Total Crushed Product Schedule

Lump 79,972 56.5

Fines 119,959 58.0

Total Existing Stockpile

Lump 34,601 55.8

Fines 54,336 56.8

Total Shipping

Lump (Scheduled) 114,573 56.3

Fines (Scheduled) 174,295 57.6

Shipping prior to April 2014 131,132 59.1

Total BSP Project 420,000 57.7

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2 Environment, Health and Safety

2.1 Social Responsibility

This report highlights the outcomes of work undertaken by Sherwin Iron’s indigenous liaison officers during the first quarter of 2014. It has been prepared as part of the company’s wider Social Responsibility reporting requirements.

2.1.1 Cultural Heritage Management

Wet season conditions prevented fieldwork from being undertaken during the quarter. Consequently, Cultural Heritage Management focused largely on information management and on preparation for the forthcoming field season.

The principal activities undertaken included:

• Integration of data collected from archaeological site investigations during 2013 into Sherwin Iron’s GIS and mine mapping database. This provides a platform through which cultural heritage material can be managed and protected during mine planning and operations.

• Investigating the feasibility of a real-time reporting system that will allow feedback of information to Traditional Owners through a computer portal based at the mine site.

• Preparing formal Strategic Plans and Procedures as part of the Company’s manual for management of Cultural Heritage.

• Planning of archaeological field surveys for the next quarter.

It is anticipated that archaeological fieldwork will recommence in early May, with surface surveys planned for areas immediately to the north and the south of the existing Bulk Sample Pit. This will allow sampling to continue and a smooth transition to mining to proceed once approval has been obtained.

Archaeological fieldwork will continue throughout 2014 with completion of additional archaeological surveys at Area C, Mount Scott and other locations determined by exploration and mine planning. Additional projects (such as recording of language and traditional knowledge) will be considered and integrated into the cultural heritage management system as time and resources permit.

2.1.2 Social Benefits Management

A suite of social benefit initiatives were prepared as part of the environmental impact assessment process. So far only a limited amount of work has been undertaken, mainly because the additional resources required will only become available once the project has transitioned to its mining phase.

Sherwin Iron’s main focus during the quarter related to developing its processes for integrating local Aboriginal people into the workforce. Prior to and during March, Sherwin Iron had 3 local Aboriginal people working at the site as laborers. A further 24 applications have also been received from the Northern Land Council on behalf of people from local communities seeking employment. Sherwin is currently reviewing these applications in preparation for proposed expansions of work once the project has been approved.

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The principal activities undertaken during the quarter included:

• Preparation of a formal Strategic Plan to address Aboriginal employment at the Project.

• Holding round table discussions with the Northern Land Council and Balmoral Contracting to plan for a larger intake of Aboriginal employees once the mine has been formally approved.

Employment planning will continue throughout 2014, with the intention to hold meetings with contractors and the NLC every two weeks – monthly at a minimum.

A small number of short-term and casual employment opportunities are expected to arise once archaeological fieldwork recommences. Additional opportunities for developing Joint Ventures with family groups continue to be investigated.

2.2 Safety

Safety remained paramount throughout the month, despite the significant interruptions to the operation, however 3 incidents were reported. The most serious incident involved a road-train on the Roper Highway making contact with a vehicle parked on the side verge of the highway, waiting for the road train convoy to pass. No injuries resulted, but stricter conditions for travel on the Roper Highway have been implemented.

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3 Geology

Material Mined: HG Ore: 11,352t at 59.90% Fe, MG/LG Ore: 53,108t at 54.72% Fe mined in the first quarter of 2014.

Target Product specifications for materials arriving at Darwin Port were:

Fines: 58.2%Fe; SiO2 to target 13.0%, and SiO2 to never exceed 14.0%.

Laboratory: 1806 samples submitted to the laboratory at an average cost of $26.5 per sample.

Reserve Position: Ore Reserves for HG (>55% Fe) stand at 120,048t at 59.0% Fe, and for MG stand at 82,571t at 55.5% Fe.

Production Reconciliation will be carried out in April.

Haulage:

34,376t of fines were trucked to Mataranka. Total fines at Mataranka stand at 35,969t.

18,217t of fines were trucked to Darwin Port at DSO grade.

Shipping: A total of 60,015t of ore was shipped for the quarter, consisting of one fines ship carrying a total of 60,015t at 58.24% Fe and 12.98% SiO2.

Grade control drilling: Stage 4 Blast 8 was completed in March (approximately 20 holes for 300 metres). All results have been received and the wireframe is complete. Short term budgets were prepared for bulk sample grade control drilling including bulk sample assay and drilling costs associated with each drill program, i.e. Blast 8 and Stage 3 Reconnaissance.

Exploration Infill drilling: Stage 3 was completed in March at nominal 50m x 50m spacing (approximately 18 holes for 330m). Interpretation of results and the wireframe has been completed.

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4 Mining Production

Mining for the quarter was below expectations due to delays caused by heavy rainfall, particularly during February.

Mining of Stage 2 was completed in February. Mining of Stage 4, blast 1 was completed in January and mining of blasts 2 – 9 began in March, with the main focus the removal of waste from all blasts. 15,356 tonnes of low-grade ore was mined from Stage 4 in March, primarily from blasts 2, 6 and 7.

A&M Drilling returned to site in February to recommence blast hole drilling in Stage 4 and to also start charging and loading holes drilled in late 2013. Drilling in Stage 4, blasts 4, 5, 8 and 9 were completed in March. A total of 859 holes (7,223 metres) were drilled for the quarter.

Other works for the quarter included:

A total of 24,864 tonnes of waste, road base and rocks were carted to various destinations including the camp haul road and the Sherwin Creek area. This material was used to build a bypass road after the haul road collapsed during heavy rainfall in February.

Grade control drilling was carried out in stage 4 blast 8 (intensive drilling at closer spacing) and stage 3 (wider spacing). Cheyne Drilling spent 7 days on site to complete this job.

Table 4-1 Mining Physicals Overview – Mining Production – Budget vs. Actual

Mining Physicals Overview – Mining Production - Budget vs. Actual –Quarter 1 2014

This Quarter YTD Project To Date

Actual Forecast Actual Forecast Actual Forecast

Total Material Movement

Ore t 64,460

64,460

395,824

Waste t 212,564

212,564

1,157,860

Mineralised Waste t 184,932 184,932 600,248

Total Production t 461,956

461,956

2,153,932

Ore Mining

High Grade t 11,352

11,352

225,874

% Fe 59.90

59.90

58.90

Medium Grade t 8,272

8,272

62,788

% Fe 54.90

54.90

54.90

Low Grade t 44,836

44,836

107,162

% Fe 54.69

54.69

54.81

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Table 4-2 Stockpile Closing Summary - ROM

Stockpile Closing Summary –ROM – Quarter 1 2014

Tonnes Fe%

High Grade - -


Low Grade 65,282 53.40

Figure 4-1 Mining In Stage 4 27/03/2014 (panoramic)

Figure 4-2 Drilling Stage 4 Blast 5 10/03/2014

STAGE 4

STAGE 2

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5 Crushing and Stockpile Management

41,488t of ore was crushed this quarter, minimal crushing occurred during February due to rain causing persistent stoppages of mining activity.

A small amount of lump was rescreened to remove oversize.

9,714t of waste material was crushed during the quarter for road sheeting aggregate and stemming for blasting.

Figure 5-1 ROM 19/03/2014

Figure 5-2 Crushing MG Ore 10/03/2014

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6 Transport and Shipping

35,376t of ore was trucked to Mataranka at 57.53% Fe. Significant rainfall during the quarter caused the haul road to close on several occasions. 15 days of haulage were lost during February and March due to damage and flooding of the haul road.

18,217t of ore was trucked from Mataranka to Darwin at 59.39% Fe. No haulage to Darwin has occurred since 21st January due to heavy rainfall.

Significant damage was caused to the stockpile pad at the Port during the second shipment due to heavy rain and equipment breaking through the floor of the pad. 70% of the Port stockpile pad is now available for use with further works continuing to repair the remaining 30%. Existing stockpiles have been reconsolidated. The remaining repairs to the pad should be complete at the end of the first week in April.

The second shipment was a fines ship containing 60,015t at 58.24%. This left the Port in the second half of January.

Table 6-1 Mining Physicals Overview – Haulage and Shipping – Budget vs. Actual

Mining Physicals Overview – Haulage and Shipping - Budget vs. Actual – Quarter 1 2014

This Quarter YTD Project To Date

Actual Forecast Actual Forecast Actual Forecast

Haulage to Mataranka

Lump t -

-

-

% Fe -

-

-

Fines t 34,376

34,376

181,376

% Fe 57.53

57.53

59.07

Total Trucked t 34,376

34,376

181,376

Haulage to Darwin

Lump t -

-

-

% Fe -

-

-

Fines t 18,217

18,217

149,470

% Fe 59.39

59.39

59.43

Total Trucked t 18,217

18,217

149,470

Iron Ore Shipped

Lump t -

-

-

% Fe -

-

-

Fines t 60,015

60,015

131,132

% Fe 58.24

58.24

59.09

Total Shipped t 60,015

60,015

131,132

% Fe 58.24

58.24

59.09

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Table 6-2 Stockpile Closing Summary - Mataranka and Darwin

Stockpile Closing Summary – Mataranka and Darwin – Quarter 1 2014

Tonnes Fe%

Mataranka

Lump - -

Fines 35,969 56.60

Darwin

Lump - -

Fines 10,113 58.0

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7 Projects

7.1 Exploration

Approval from the Executive Director has been given for reconnaissance diamond core drilling of key targets at Mt Scott to confirm existence of DSO grade (evident in mapped/rock chipped zones) before committing to a full RC drilling programme. Core drilling is planned to start on 28th April.

Sherwin Geology group was asked to contribute to groundwater search through a regional structural interpretation from available data in early April.

Mining Lease application ML 29784, covering proposed DSO Operations, was surveyed by AMM surveys (formerly Vekta) on 25th March in anticipation of the Mining Lease being granted.

Renewal of the EL 26412 tenement was submitted to the DME with a waiver of reduction, so that Sherwin retains the full tenement area. This tenement hosts targets with DSO grade from extensive rock chip sampling in 2011 and is yet to be drill tested near Western Desert Tenement and WDR resource boundary.

The Annual Group Technical and Expenditure Report for Roper River Iron Ore Project is being prepared for submission to DME by 27th April. Bulk Sample Extraction has ensured Sherwin has met its Project covenant exploration expenditure of slightly over $1M on its total exploration tenements.

7.2 Feasibility Study

7.2.1 Pre-Feasibility Study of DSO Project in Area C

Continued work on the Pre-Feasibility Study for the DSO Project in Area C has provided information for the EIS (Environmental Impact Study) and EMP (Environmental Management Plan).

Mine planning work will provide information in April for:

The Bulk Sample Pit Project

o Grade control resource block model

o Production reconciliation model

o Schedules of mining, crushing, transport, and shipping

MMP - the final site layout, organisational structure, and manning schedule

DSO Pit Project – 12 month rolling mine planning

o Site infrastructure layout and development schedule

o Compile grade control model and exploration model

o Detailed stage pit design for 12 month mining plan

o Construct detailed schedule model for schedule from pit to port

Mine Production Report System

o Production database established in March 2014

o User Manual will be developed in April

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Production Reconciliation model

o Grade control block model constructed

o Reconciliation model will be developed in April to provide information for EOM report.

7.3 Status Approval

7.3.1 Environmental Approvals

The Supplementary Environmental Impact Statement (SEIS) was finalised and submitted on the 25th March. Additional information can be requested by regulators up until the 15th April. If no additional information is requested, the NT EPA must provide its assessment report to the Minister by the 29th April.

The NT EPA assessment will then be provided to the Commonwealth for approval under the EPBC Act. This is likely to take the full mandated period, potentially until the 9th June. At that point, Sherwin will also be advised of any additional conditions which may be imposed. Any such conditions must be included in the MMP, which cannot be submitted until after EIS assessment is complete.

Finalising a draft of Environmental Management Plans, as well as development of an Environmental Management System to comply with ISO140001, is also required before the MMP can be completed and submitted.

7.3.2 MMP Approval

A first-draft MMP document will be completed in early April 2014. Extensive input is required from Sherwin, particularly in regard to the final site layout, organisational structure, manning, and a wide range of environmental management commitments.

The main risk items to timing of MMP completion however, are the identification of adequate groundwater supplies, and completion of the traffic management plan. The traffic MP relies on formalisation of the transport agreement with the NT Government, and knowledge of the exact requirements of this agreement.

Submission of the MMP is targeted for early June, as soon as the EIS assessment is completed. That primarily relies upon:

there being no significant extra conditions attached to EIS approval;

the water search being successful in a timely manner;

The roads use agreement with the NT Government being finalised, conditions known and a traffic management plan being finalised.

The MMP assessment time is not mandated, but typically takes around a month. This means MMP approval should be possible by early to mid-July 2014.

7.3.3 Deposit “C” 3 Mtpa DSO Project Approval Schedule

The likely approvals timetable is outlined below. Completion of the Mine Management Plan approval process and commencement of mining operations is targeted for early to mid-July 2014.

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This is an ambitious but achievable outcome, which is dependent on optimum outcomes in the many components of work involved, in particular, the search for a water supply. Therefore some risks exist in this target.

Other components which will also need to be in place include the granting of the ML and associated general purpose leases, and submission of an application for Mining Authorisation (bundled together with the MMP).

Once the MMP is approved, the various Works Approvals applications can be lodged. These will be required for construction of some project components but are not required for operations using existing infrastructure.

Figure 7-1 Mining Management Plan Approval timeline

7.4 Implementation

7.4.1 Camp Construction

First 32 rooms, below and above ground services complete

Underground services only for remaining 32 rooms have been completed with underfloor and electrical to continue pending availability of labour

Access decking for 32 rooms completed. Verandas for all rooms and decking for remaining 32 rooms to be completed

Awaiting arrival of WTP (waste treatment plant) to complete sewerage works for the whole camp

Refrigeration works have been completed for the kitchen. Critical spares to be purchased

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Air-conditioning for the first 32 rooms complete with work continuing on cleaning and test running remaining units. Purchase of spares required

Staff critical to production have been moved from AIR and Flying Fox camps into the new camp

Communications equipment has been ordered and the service provider booked to install on or close to the 24th April

Rodney Illingworth

Executive Director

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sherwin iron limited abn 98 009 075 861 for personal use ... · mining activities and capital works...

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