Infrastructure – The innovative utilisation of proven technologies

A slurry is a mixture of fine particles of a solid material and liquid which behaves like a relatively uniform liquid when pumped through a pipeline. In our case1, our planned slurry is finely ground magnetite concentrate mixed with water comprising 2 parts magnetite and 1 part water. This mixture (slurry) can be very cost effectively pumped through a long distance pipeline and the concentrate and water can be simply separated at the terminus of the pipeline by filtering. There are thousands of kilometres of slurry pipelines operating successfully and essentially trouble free world-wide.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies

For the Mawson Iron Project, the slurry is a mixture (approximately) of two parts magnetite concentrate to one-part water, by weight. Studies1 currently have the slurry discharging into agitated surge tanks as it arrives at the floating port. This slurry is then distributed to individual banks of filters to remove the bulk of the water. The filtered concentrate will contain approximately 8.5% moisture. There is nothing novel about the filter plant. Filter plants function perfectly well anywhere, onshore or offshore, as long as they are set up correctly.

The oil & gas industry have the equivalent of entire refineries on floating platforms (Floating Production Storage and Offloading facilities - FPSO’s) now, and as planned for the offshore (Browse FLNG Development Woodside) off Western Australia. Other examples of complex processes being applied at sea, include many of the world’s navies using nuclear reactors as a means of power, and garbage processing plants. By comparison, a fixed slurry receiving and filtering plant is a very unsophisticated, low-tech installation and low risk. The high quality desalinated water removed from the slurry by the filter plant will be returned to shore for use in industrial, municipal or agricultural applications or returned to the mine for reuse.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies

This is a good question. South Australia is the driest state in Australia. We believe that it is virtually impossible to quantify, beyond doubt, the water resources in an underground reservoir or the aquifer behaviour over time. Having said that, we know the ground water resources in the Mawson Iron Province (Braemar) are quite limited in area and volume. We would not even ask to use valuable Murray River water unless it came from the pump-back bore fields developed to combat soil salting problems. The decision as per Lodestone’s existing studies1,2 to use sea water from the Spencer Gulf has totally de-risked our water supply versus other projects proposing to live with the risk of extracting a very large amount of water every year via a bore field, from an aquifer, for 25 years or more.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies

2  ASX announcement 27th November 2013

Third party concentrate producers who wish to use the pipeline and associated infrastructure would firstly have to meet the specification of our concentrate. The third party concentrate could then be co-mingled with Magnetite Mines concentrate and a single uniform product sold and payments made pro-rata. Commercial arrangements for use of the infrastructure would be negotiated on arms length terms. There are many possible commercial structures for the terms of such infrastructure sharing. The port can serve all potential production from the Mawson Iron Province both South and North of the trans-continental railroad. This is a huge plus for South Australian resource development.