Social and Environmental Impact

The conceptual studies1 show total employees for the first phase that will produce 25 Million tpy of concentrate is estimated to be 459. It is estimated that there will be 229 at the mine and 151 at the Burra control and maintenance centre, while Wallaroo port operations will require 55 and the Adelaide office will have 24 employees. We have to look beyond these numbers to what is called the multiplier effect. With a project like this, every direct job in the project can be expected to support circa an additional 3.5 indirect jobs in the wider economy.

1  Conceptual Feasibility Study has been completed by the Lodestone Group for the Braemar Iron Project, which shows the the proposed Infrastructure Solution achieve a capacity of up to 100 mtpa. The Company advises that this conceptual feasibility study is not based on any assumptions of actual use of the infrastructure Solution by the Company or any other users in the Braemar region with the exception of the Braemar Iron Project.

 

There will be no “Company Towns” and no Fly In - Fly Out (FIFO) in our proposed mining and infrastructure project. The floating port can be well served from Wallaroo and surrounding towns, while the mine workforce will be able to choose from amongst Burra, Clare, Peterborough and surrounding small towns. As the project expands to the east, Broken Hill will also be a choice of residence. In other words, the projects will contribute to the positive development and growth of existing socially stable communities. Mine employees will be transported to and from work in large personnel helicopters operating from a centralised base or bases.

We believe that grade will become King in the push to reduce emissions from steel making. Technically, there is no easier way to quickly reduce emissions from steel making than to use the highest grade iron ore available. Making steel from a feed of 100% magnetite has the potential to reduce carbon dioxide emissions by over 100 kg per tonne of steel (see Crucible Report for Details). Magnetite concentrates present the industry with one of the few sure, high grade iron ore feeds available.

Our mining lease will be on pastoral leases covering rather poor quality grazing land. Mining rights rank equally with pastoral lease rights. We do not anticipate any problems in this respect and expect to maintain amicable relations with pastoralists in the area. Neither do we anticipate any insuperable native title issues. This is in contrast to other parts of the state, where there are issues of mining on freehold, high quality, wheat/crop growing country.

Although there will be disturbance while the pipelines are laid, the pipes will be buried 1.5m deep, and after a construction period of a few months in any given area, most of the land can then be returned to its former productive use - crop growing; grazing etc. The best and safest working width for the corridor during pipe laying is 100m. The hole to bury the pipe is more likely to have a width of less than 10 metres. As much as possible we will use pre-existing roads for pipeline access after construction. Between Burra and the mining sites we will be building a high quality, all weather, sealed road in the corridor and installing a high capacity power line to supply electric power to the project. This power line will also be used to return power to the grid when the renewables potential of the mining areas is developed. We see the solar potential in the Mawson Iron Province as enormous.

Pipelines in the Mid North region of South Australia are not uncommon. This includes a buried north-south pipeline that carries natural gas from the Cooper Basin to Adelaide (Moomba Gas pipeline). Farming has been able to continue successfully where these pipes are laid beneath the earth.

There are thousands of kilometres of pipelines carrying all kinds of commodities under oceans, seas and waterways around the world. The risks of a slurry pipe failure are extremely low - probably much lower than that of many other types of pipelines. A valve station at the shore line would immediately shut in the event there was a loss of pipeline pressure in the subsea portion. By comparison, there are thousands of kilometres of oil & gas pipelines on the ocean floor that operate without problems 24/7, year in year out. Magnetite is completely inert and harmless. It will not react with sea water and is not at all toxic to marine life - unlike oil & gas. Leaks in slurry pipelines are extremely rare. The first iron ore slurry pipeline system built is at Savage River in Tasmania. Apart from a very small leak early in the operation of the pipe which did no environmental damage, it has operated for 49 years without leakage. Since this pipeline was built, controls and procedures have been fine-tuned to a virtually “fool-proof” protocol.

After initial installation of the pipelines, the impact of the project at the shore line will be close to zero. After very contained disturbance during construction (pipe laying), the small area where the laying of the pipe has disturbed the natural shore line will be immediately restored to its prior condition or better. Thereafter it will be difficult to even determine the location at which the pipeline enters the sea. The alternative of a conventional iron ore port such as other iron ore developers are proposing, results in large tracts of land being withdrawn from alternative productive uses. A highly visible and large train marshalling yard, as well as a stockpiling area is there to be seen by everyone for the duration of the operation, and hence there are significant continuing environmental disturbance and emissions issues. In the Point Riley area, there has been significant prior shoreline degradation by recreational activities such as motor biking. This can be easily remediated in and around the pipelines, with the area restored to natural contours and planted with native vegetation.

Spencer Gulf water is only 2/3 as saline as the ground water in a large part of South Australia, including the Murray Basin to the south of the Mawson Iron Province, and great parts of the Eyre Peninsular. In any case, our tailings repositories will be designed1,2 to contain all the residual moisture and salt entrapped in the pores spaces of the fine tailings material by capillary action. Additionally, the ground water (of which there is very little) below the repositories is hyper-saline. We also have a back up plan to intercept, collect and recycle any seepage from the repositories, in the unlikely event that this may occur.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies

2  ASX announcement 27th November 2013

Railroads play a vitally important role in the overland transportation of bulk commodities but there are drawbacks in certain situations. Railroads and trains unavoidably involve permanent alteration of the landscape and permanent withdrawal of land from other productive uses. A fenced railway right of way can split paddocks and make them difficult to access as an entirety, thus reducing their value to the farmer. This is accompanied by a permanently visible alteration to the social and natural environment. To move 25 Million tpy of concentrates by railroad would involve multiple trains. If we assume each train carried 15,000 tonnes, then it would require 1,667 trains each year, or an average of 4.5 trains every 24 hours. Unavoidably, trains make quite a lot of noise and can cause disruption to traffic when crossing roads and other thoroughfares.

Pipelines are virtually silent and virtually invisible once installed. The minor exceptions are the pump and valve stations. The study1 of the proposed pipeline shows a pump station at the mine and one approximately half way to the shore of Spencer Gulf only. Other than that, there will be some relatively small valve stations at strategic points such as the Burunga Gap, and just inland from the shore line. As well as these social and environmental advantages, pipelines cost far less than railroads. Our studies early on, showed that pipelines have lower capital costs than the rail line, even before considering the cost of the train sets. Breamar Infrastructure studies1 showed operating costs are multiples lower per tonne than a Railroad.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies

With a slurry pipeline, from the moment the ore enters the concentrator at the mine, it essentially becomes a “closed” system, so dust cannot escape the system. The conceptual studies1 of this project show that even after filtering at the floating port, the concentrate will either be loaded into ships immediately or stored in covered bunkers in the floating port. Even during ship loading, the targeted 8.5% moisture in the concentrate and the equipment used will ensure there is no fugitive dust.

As there are no open stockpiles or open materials handling on shore, there will be no dust in the shoreline area or anywhere in the vicinity of the pipeline or in the town that the pipeline passes nearby.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies