QUEENSLAND is to get its first iron ore mine courtesy of an innovative $589 million plan by Xstrata to develop an underground mine at its Ernest Henry copper/gold operation near Cloncurry, in the north-west of the state.
Copper/gold production from the underground operation will be less than half the current rate from the soon-to-be-exhausted open-cut mining operation. But rather than ending in the next few years, output will now be extended to at least 2024 with the help of a new revenue stream from magnetite, a low-grade iron ore mineral.
Mining iron ore as a secondary revenue stream to copper and gold is a novelty in Australia, although the idea has been studied on and off at the biggest of Australia's so-called iron-oxide copper/gold deposits, BHP Billiton's Olympic Dam mine in South Australia.
The go-ahead by Swiss-based Xstrata for the underground development was viewed by several junior mining companies in the Cloncurry/Mount Isa region as a tactical ploy to extract the best deal on copper/gold ore supplies they own, which could keep the Ernest Henry mill full once the open-cut reserves are exhausted, without the need to bother with magnetite.
Either way, extending the life of Ernest Henry is vital to the continued supply of copper concentrates to Xstrata's copper smelter at Mount Isa and, in turn, its copper refinery in Townsville.
The new-look Ernest Henry project is based on an underground ore reserve of 72 million tonnes at a grade of 1 per cent copper, 0.5 grams of gold a tonne and 22 per cent magnetite.
Xstrata is forecasting annual production of 50,000 tonnes of copper and 70,000 ounces of gold (in concentrates) when the underground mine takes over.
Magnetite production was put at 1.2 million tonnes a year for export to Asia, making it Queensland's first iron ore producer.
Construction of the underground mine will start in the first half of next year, with first production in late 2011 and full-scale operation from early 2013.
Source: Sydney Morning Herald
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