Magnetite Mines Limited (ASX:MGT) announced on 5th July 2021 the results of a new Pre-Feasibility Study (“PFS”) looking into the potential production of a superpremium high grade (67.5% to 68.5% Fe) magnetite concentrate from its wholly owned Razorback Iron Project, located 240km east of Adelaide in South Australia.

After a review of the information provided in the market release and discussion with MGT management, we have formed the view that this is an excellent result for the Company and project.

Selected key highlights of the new study are as follows:

• Study based on a robust 473Mt ore reserve, within a much larger resource of 3Bt (announced 1st July 2021)
• Study focussed on utilising existing road, rail, port and utilities (grid power) infrastructure in the region and immediate vicinity of project, to ensure capex requirements were kept to a minimum
• Base (Referred to in the study as “Reference”) case of 12.8Mtpa plant throughput to produce 1.9Mtpa of superpremium (67.5-68.5% Fe) concentrate
• Elevated optimised cases demonstrate increased 15.5Mtpa throughput to produce up to 3.1Mtpa
• First Capesize shipment of superpremium concentrate ex Whyalla slated for end CY 2024
• Capex, considered as moderate to low, estimated at between USD429-$506m (AUD572-AUD675) (= circa 1/2 to 1/3 of Capex of most peers) in the sector
• Long project life optimised case NPV AUD669million and 20% IRR over a simulated 25 year mine life (NB; 100 year mine life potential based on reserves alone with an additional 100 years potential likely in additional resources)
• Study parameters and inputs used by MGT’s Tier 1 consultants considered conservative in nature based on 62%Fe iron ore prices of USD100 and USD150/tonne. We note that the average price for the last 6 months to end of June for 62% Fe concentrate has been USD185/tonne and current prices for 68%Fe concentrate is around USD280/tonne

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