Razorback Iron Ore Project

Completion of Optimisation Studies

Magnetite Mines commenced Optimisation Studies in September 2022 to redefine the go-forward scope of the Razorback Iron Ore Project based on an initial production scale of at least 5Mtpa. The Company was able to leverage much of the work undertaken in the 2.5Mtpa DFS initiated in August 2021 encompassing mine planning, process plant design, tailings dam design, site layout, power supply and logistics solutions. The Optimisation Studies were completed on time in March 2023 and affirmed the viability of the redefined Project scope.

2022 Drilling Results Incorporated into Metallurgical Testwork

As part of the Optimisation Studies, Magnetite Mines commissioned additional metallurgical testwork based on new ore samples from its 2022 drill program (11 vertical PQ diameter and 6 inclined HQ diameter diamond drill holes) targeting prospective areas of the Razorback and Iron Peak deposits. The testwork, undertaken by Bureau Veritas, Weir Minerals, Loesche and Eriez, validated the ability of the Razorback Project’s processing flowsheet to produce 5Mtpa of high-grade iron ore on a Life-Of-Mine (LOM) basis with the following attributes (weighted average for all flotation variability testwork):

See ASX Announcement 28/02/2023

Significant increases in Probable Ore Reserves and Mineral Resources

The Optimisation Studies undertaken in FY2023 have supported a 418% increase in the Project’s Probable Ore Reserves from 473 million tonnes to 2 billion tonnes over the reporting period, including a maiden Probable Ore Reserve of 362 million tonnes declared for the high-grade Iron Peak deposit. The updated estimate, released in two stages in March and June 2023, was prepared by mining consultancy AMC Consultants.

Ore Reserves are a subset of Mineral Resources and are quoted at an 8% eDTR (Mass Recovery) cut-off grade. Magnetite Mines Limited is not aware of any new information or data that materially affects the information included in the Ore Reserve announcement dated June 2023 and all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply.

The substantial increase in the Company’s Ore Reserves position in FY2023 was underpinned by an an increase in the Razorback Iron Ore Project’s Mineral Resource Estimate to 3.3 billion tonnes. Underpinning the revised estimate is 503 million tonnes of Mineral Resources attributable to the Iron Peak deposit with an estimated mass recovery of 19.4%, validated in the recent metallurgical testwork program. The incorporation of the 2022 drilling data, particularly for Iron Peak, resulted in an average mass recovery across the Project’s 3.3 billion tonne Mineral Resource of 16.0%.

All figures quoted at an 11% eDTR cut-off. Magnetite Mines Limited is not aware of any new information or data that materially affects the information included in the resource announcement dated February 2023 and all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The 8% eDTR utilised in the Ore Reserve differs from the Current Mineral Resource estimate which quotes an 11% eDTR cut off and is based on up-to-date mining assumptions.

Logistics Configuration Derisked

Magnetite Mines has made substantial progress in derisking a viable logistics configuration for the first stage of the Razorback Iron Ore Project. Memoranda of Understanding were signed with port operators Whyalla Ports (part of the GFG Alliance Group) and Flinders Ports in February and March 2023, respectively, to progress commercial negotiations for port handling, shipping, and other services. Whyalla Ports operates the Port of Whyalla, the only port in South Australia currently exporting magnetite concentrates. Flinders Ports operates seven commercial ports including Port Pirie.

Viable Water Supply Options

Three technically and economically viable Project water supply options were costed during the Optimisation Studies: the construction of a pipeline from the Spencer Gulf; the construction of a pipeline from a Murray Basin saline wastewater disposal scheme; and the development of a borefield in the northern part of the South Australian section of the Murray Basin, each requiring a pipeline to the mine site. Selecting a go-forward water supply configuration that is cost-effective, sustainable and that carries low technical and approvals risk is a critical near-term priority for the Company. In line with this objective, the Company submitted a formal Unsolicited Proposal to the SA Government relating to access to the Murray Basin saline wastewater resource.

Environmental Approvals and Preparation of a Mining Lease Proposal

In FY2023, Magnetite Mines progressed a broad range of activities contributing to the preparation of a Mining Lease Proposal (MLP), which is the primary development application process for mining projects under the Mining Act 1971 (SA). Multi-disciplinary environmental consultancy Eco Logical Australia, with which the Company has a longstanding working relationship, continued baseline characterisation studies and was commissioned to finalise all remaining work packages required to underpin a diligently-prepared MLP submission.

Partnering Agreement with the Ngadjuri Nation

The Ngadjuri People are the Native Title holders, Traditional Owners and cultural custodians of the Razorback Project area, and for the majority of planned non-mining infrastructure corridors. Magnetite Mines has been actively progressing a voluntary Partnering Agreement as the ‘foundation stone’ for a respectful, productive and long-term relationship centered on the Razorback Project. The Partnering Agreement is anticipated to be finalised early in FY2024 and will support a collaborative approach for subsequent Project activities, including the negotiation of a Native Title Agreement.

Landmark MoU with the District Council of Peterborough

Magnetite Mines’ close relationship with the District Council of Peterborough was formalised in a landmark Memorandum of Understanding announced in a Joint Media Release on 5 May 2023. The MoU underscores both parties’ commitment to work collaboratively to bring the Razorback Iron Ore Project to fruition with a focus on generating enduring social and economic benefits for the Peterborough community.

Hon. Geoff Brock MP, Mayor Ruth Whittle OAM, and CEO Tim Dobson attending the MoU signing ceremony

Launch of ‘foresight’

In June 2023, the company launched its bespoke sustainability platform ‘foresight’, the culmination of a months-long, company-wide initiative aligned with the Company’s commitment to best-practice corporate governance. ‘foresight’ provides a framework for transparently evaluating the Company’s, and the Razorback Iron Ore Project’s, compliance with a range of principle and performance based voluntary initiatives intended to engender sustainable business practices in the mining sector.

The Braemar Magnetite Advantage

The Razorback Iron Ore Project’s two key deposits, Razorback and Iron Peak, are part of the Braemar Iron Formation, a singular dipping tabular body with minimal faulting, folding and intrusives. The grades, thickness, dip and outcropping geometry of the Braemar Iron Formation are consistent over kilometres of strike. Research commissioned by the South Australian Government has estimated that the exploration potential of the Braemar region is over 50 billion tonnes based on existing mining tenements alone.

Braemar magnetite deposits, which consist primarily of siltstones, are notably softer than those in other iron ore producing regions in Australia and around the world, increasing grinding energy efficiency. In recent metallurgical test work, samples from the Razorback and Iron Peak deposits generated average bond ball work indices of 8.6kWh/t and 6.8kWh/t, respectively. Magnetite deposits hosted in banded iron formations, common to the Pilbara and Mid-West regions of Western Australia, have work indices in the order of 18-25kWh/t (i.e., 2 to 3 times higher).

The Razorback and Iron Peak deposits have negligible overburden (part of the resource outcrops) which is conducive to lower strip ratios and mining costs. In the interim economic update released to the ASX in June 2023, Magnetite Mines estimated a Life-Of-Mine strip ratio of 0.35 for a 91-year, 5Mtpa development at Razorback.

Existing Road, Rail and Port Infrastructure

The Razorback Iron Ore Project is located 240km from Adelaide close to the Barrier Highway (~40km), open-access rail (~40km) and existing iron ore ports on the Spencer Gulf coast (Whyalla 315km, Port Pirie 180km).

Roads in the area are a combination of national highways, state arterial roads and local roads. The Barrier Highway is part of the national freight network and is located just 40 kilometres from Razorback. It carries approximately 1,000 vehicles per day of which approximately 20 percent are road trains carrying freight.

The Crystal Brook-Broken Hill railway is also approximately 40km from the Razorback Project site. It is part of the Defined Interstate Rail Network (DIRN) and is owned and operated by the Australian Rail Track Corporation (ARTC). The rail line can carry 1,800 metre trains with 25 tonne axle loads and have an 80km/h speed limit. ARTC is currently undertaking a rail capacity modelling exercise to confirm its initial assessment that there is existing capacity to transport up to 10Mtpa of concentrate.

Magnetite Mines has signed separate Memoranda of Understanding with GFG Alliance and Flinders Ports to support the assessments of concentrate export from one of three viable port options: the Port of Whyalla (GFG Alliance), Port Pirie and Myponie Point (Flinders Ports).

Unique Access to Grid-Scale Renewables

During the 2022 DFS studies, GHD was engaged to design an electricity transmission line connecting the mine site to a substation at Bundey capable of accommodating the power requirement for a 2.5Mtpa operation. While several power supply options were explored during the Optimisation Studies, the 2022 design ultimately served as the blueprint for a revised power configuration consisting of a 275kV transmission line from Bundey and an 11kV substation at the mine site. The reconfigured transmission line can provide up to 400MVA of power, which provides ample expansion optionality over the initial targeted production rate of 5Mtpa and leaves open the possibility of electrifying materials handling activities at the mine site.

In May 2023, the Australian Energy Market Operator (AEMO) released details of a proposed high-voltage transmission link from Bundey to a mid-point in Yunta as part of the “Mid North Expansion (Northern) project”. Additional information was provided by South Australian network operator ElectraNet in its Transmission Annual Planning Update Report released in late May. The proposed line, intended to accommodate new renewable energy projects, has been indicatively designed to pass within 20km of the Razorback Project. While the development of the new line is uncertain, it represents a compelling opportunity for a near-site grid connection and substantial capital and operating cost savings. Magnetite Mines is actively engaging with ElectraNet to support their application for the Mid North Expansion (Northern) project and lobby for its approval by the AEMO.

Notwithstanding the final configuration, power for the Razorback Project will be sourced from the South Australian grid, which is forecast to be 100% renewables powered by 2030. The Company’s access to grid-scale renewables gives it a distinctive advantage in reducing, and possibly eliminating, the carbon footprint associated with its operations.

Green Iron Hub Potential

A notable recent development in the iron and steelmaking industry has been the emergence of the concept of a green steel or iron ‘hub’, in which steel or intermediate iron products are produced using low-cost renewable energy and green hydrogen. South Australia has been identified as an ideal location for such an initiative given its abundant land, solar and wind resources, existing mining and logistics infrastructure, stable regulatory frameworks, and vast reserves of magnetite deposits.