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GOONDICUM CRATER PROJECT UPDATE
24th July 2001 1.0 RESOURCES Monto Minerals NL has a Measured and Indicated Resource (sufficient for a 10 year mine life) drilled out within the Goondicum Crater of 79 million tonnes of clay/sand and decomposed gabbro (sands) containing 3.9 million tonnes of ilmenite, 2.2 million tonnes of titano-magnetite and an estimated 1.5 million tonnes of apatite and 10 million tonnes of feldspar. Additional resources are expected to be developed within the Crater by further drilling. The Goondicum Crater is located 90 kilometres west of Bundaberg. Infrastructure is established in the area however upgrading will be necessary. A water supply from bores into the Mulgildie Basin has been identified. Monto Minerals has drilled and developed one water bore to date and holds a total of three bore licences. Capital expenditure for the Project is approximately $70M. Working capital funding will add approximately $15M to Project costs. 2.0 PRODUCT USES AND PRICE ESTIMATES Ilmenite is used principally in the production of light coloured non-toxic paint, however it is also used in the paper, plastics and cosmetics industries. Goondicum ilmenite is expected to sell in a range of about $120 - $150 per tonne (FOB Gladstone). Titano-magnetite is used in the steel industry. The major market is in Japan and the price is negotiated for long term, high tonnage contracts. Estimated selling price is $40 per tonne (FOB Gladstone).. Apatite is a fertilizer mineral. Goondicum apatite contains over 40% phosphorous pentoxide and is regarded as a high grade "non-chemical" fertilizer. Estimated selling price is $100 per tonne (FOB Gladstone). Feldspar is used in the glass and ceramics industry. Estimated selling price is $90 to $125 per tonne (FOB Gladstone). The feldspar market worldwide is approximately the same size as the worldwide ilmenite market at around 8 to 9 million tonnes annually. 3.0 PROJECTED PRODUCTION The Project has the capacity to produce at the following annual rates:
4.0 MARKETING AND REVENUE Goondicum ilmenite is a sulphateable ilmenite containing extremely low levels of chromium, uranium and thorium and is suitable for the production of synthetic rutile. Sulphateable ilmenite remains in short supply and this position will continue for the foreseeable future. The present spot market for 54% TiO2 (WA) ilmenite averages $218 per tonne. Bulk ilmenite 54% TiO2 (WA) averages $194 per tonne. Goondicum ilmenite 49% - 50% TiO2 is expected to be discounted due to the lower TiO2 level but pricing is expected to benefit with allowances for the low chromium, uranium and thorium content. 5.0 MONADELPHOUS AGREEMENT Monto Minerals has recently signed an agreement with Monadelphous Group Ltd regarding the development of the Goondicum Crater Project. Monadelphous will complete the Feasibility Study, secure funding and develop the Project. Details are available in the Explanatory Memorandum to Shareholders dated 25 July, 2001. 6.0 FINANCIAL MODELLING Monadelphous has developed a financial model utilizing all relevant data from the extensive work carried out by Monto Minerals and other data. The preliminary base case financial model (ungeared) allows for the sale of only ilmenite and apatite and generates an after tax Project Cashflow of $13M in a typical year and an Internal Rate of Return of 15.2%. Various models will be produced however just with the sale of 200,000 tonnes per annum of feldspar added to the base case (310,000 tonnes per annum of ilmenite and 130,000 tonnes per annum of apatite) the Project Cashflow and Internal Rate of Return potentially doubles. EULOGIE PROJECT Monto Minerals holds a similar deposit to the Goondicum Crater resource at Eulogie, about 35 kilometres south of Mount Morgan. Exploration, drilling, sampling and metallurgical studies indicates that this prospect has the potential to produce the same mineral products. The Company plans to accelerate investigations at Eulogie once the Goondicum Crater Project is under construction. The magnitude of the investigation will be dependent upon available funds. |
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