Iron ore, other metals, Tasmania
Project
Summary
 strong
demand from Chinese steel industry
growing
demand for magnetite ore
established
production from magnetite lenses in adjacent Savage River
Iron Mine
good
road infrastructure at Arthur River
Savage
River North hosts strike extensions of Savage River mineralisation
aeromagnetic
data confirms continuity of highly magnetic trend through
Red Rock tenements
prospectivity
for other minerals
General
The Savage River Iron deposit was discovered in 1877 by the
government surveyor, Charles Sprent, but was not brought into
production until 1965. The deposit is a series of banded magnetite
(with lesser pyrite) lenses, which have been mined in two
open pits over a strike length of three kilometres. The main
orebody is up to 150 metres thick. The ore minerals are magnetite
with lesser pyrite, minor chalcopyrite and trace sphalerite,
rutile and ilmenite. The gangue is tremolite, actinolite,
dolomite, quartz, antigorite and chlorite.
The global pre-mining resource was 371 Mt @ 31.9% Fe in magnetite.
The global resources at June 2004 totalled 248.1 million tonnes
with 49.6% recoverable magnetite. The reserves and resources
for open-cut mining are sufficient for a planned mine life
of up to 9 years, and the previous owners were examining the
feasibility of an underground operation in the northern part
of the deposit. Additionally the Long Plains magnetite deposit,
located eight kilometres south of the Savage River mine contains
up to 30 million tonnes of magnetite mineralisation.
Magnetite concentrate is pumped from the mine site to a pellet
plant and loading facility at Port Latta on the northwest
coast of Tasmania via an 85 km long pipeline. Production of
ore from the Savage River open cut in 2003/2004 totalled 5.1
million tonnes, with 2.2 million tonnes of pellets being produced.
Savage River pellets currently contain about 66% iron.
In February, 2005, Ivanhoe Mines sold the Savage River iron
ore mine to a subsidiary of Stemcor Holdings Limited, of London,
U.K. The purchase price consisted of two initial payments
totalling US$21.5 million, plus a series of contingent, escalating-scale
annual payments based on the annual Nibrasco/JSM (Japanese
Steel Mills) pellet price. The escalating-scale payments are
to be made over five years, beginning March, 2006. If a US$65
a tonne benchmark price is maintained over the five-year period
between April 2005, and March 2010, the total consideration
Ivanhoe will receive for the sale of the mine will be US$122.75
million.
The February 2005, pellet-price settlement between two of
the world's largest iron producers (CVRD and Rio Tinto) and
Japanese steel mills was 71.5% higher than the 2004 benchmark
pellet price of US$38.10 a tonne, boosting the 2005 pellet
price settlement to approximately US$65.30 a tonne.
Geology and
Mineralisation
There is no reported exploration specifically directed to
iron deposits of Savage River type in this ground despite
their immediate proximity to the Mine and despite the fact
that the aerial-magnetics clearly indicate that the same highly
magnetic units trend north of the Mine into the tenements.
The reason for this seems to be a combination of poor markets
for iron in the past, relative ruggedness and inaccessibility
of the terrain.
Thus a priority for future exploration of the tenements would
be to target the best magnetic features and evaluate these
on the ground for the presence of magnetite bodies.
Minor magnetite lenses were reported by Nye in the Arthur
River area when searching for base metals and minor magnetite
occurs in drill holes below the Keith River gossan, so a systematic
search may find major deposits.
The Keith River gossan is potentially a source of iron ore.
It is large, has iron content to 52% in its unprocessed state,
and apparently has low abundances of deleterious trace elements.
The primary source rock is pyritic, but weathering is very
deep here compared to normal Tasmanian profiles, offering
a potential resource of limonitic/hematitic iron.
In the past, exploration has focused on the obvious magnesite
potential. Title to magnesite is not available to the Company,
but the magnesite bearing sequences lie within the Bowry Formation,
which hosts all known mineralisation types in the area, including
the Savage River magnetite deposits, the Specimen Reef gold
deposit, the Victory copper deposit and the Keith River pyritic
deposits.
Research has shown that there are several base and precious
metals targets which should be followed up:
(a) In the Savage River North License;
The
Specimen Creek gold deposit was found to lie in a large shear
system, the bulk of which is unexplored,
At
Davis Creek there are old workings with lead on the dumps
and nearby there are significant lead and zinc anomalies in
stream sediments, suggesting that a larger lead/zinc mineralised
system may be present.
(b) In the Arthur River
License:
The
magnesite units carry low abundances of gold and platinoids.
Thus these units are precious metal targets in their own right.
There is a significant stream sediment gold anomaly generated
by CRA (300ppb in minus 80mesh and 29 ppg BLEG) which has
not been adequately explored. Historic sluicing of alluvial
gold in the Arthur River area also suggests that there are
bedrock sources of gold which have not been found.
The
old Victory copper mine and surrounds has not been systematically
explored with modern exploration techniques.
The Savage iron deposit is popularly regarded as a stratiform
volcanogenic, magnetite-pyrite deposit. The geological setting
has been likened to the Japanese Sambagawa Metamorphic Belt,
in which there are narrow linear belts containing high-pressure
metamorphic assemblages, and the successions comprise thick
continentally derived clastic sediments with rift-related
basaltic volcanics. That belt hosts the Besshi style volcanogenic
Cu-Zn-Ag-Au deposits.
Because some of the gold and copper deposits of the area are
associated with magnetite bearing rocks and because albite
is a commonly reported alteration mineral, it has been speculated
that the area is prospective for Iron-Oxide-Copper-Gold deposits
of Olympic Dam type.
History
In 1965 Picklands Mather and Co International held over 10,000
km2 in northwestern Tasmania. An extensive regional stream
geochemical survey was conducted and although a number of
geochemical anomalies were detected, and some re-sampling
occurred later, no further work was undertaken. Unfortunately,
records of this sampling program are no longer held in open
file by the State Government agency, Mineral Resources of
Tasmania.
In 1970 Mineral Holdings Aust. Pty. Ltd (“MHA”)
commenced exploration by ground checking aerial-magnetic anomalies
especially near the old Victory Mine. MHA later formed joint
ventures with CRAE. A large gossan at Keith River was investigated
in some detail, culminating in two diamond drill holes. The
gossan occurs over an area of 500m x 100m, and contains 22%
to 53% iron in the form of limonite and hematite, with low
occurrences of elements such as copper and gold.
Drilling showed that the primary source material was lenticular
stratiform pyrite with minor magnetite and trace chalcopyrite
hosted in dolomite, siltstone, shale, quartzite and amphibolite.
Copper and zinc content was less than 1500 ppm, and gold content
from composite 30m samples was less than 1.2g/t Au. Weathering
and gossan development here is deep compared to normal Tasmanian
weathering profiles; there is evidence that the gossan is
Permian in age.
An aeromagnetic anomaly 2.4 kilometres downstream from the
Old Victory Mine was found to be associated with an amphibolite
carrying quartz - carbonate - pyrite - chalcopyrite veins,
associated with a small irregular magnetite body.
In 1972 a copper occurrence was investigated in the bed of
the Lyons River by CRAE. Here phyllite, chlorite schist, and
dolomite with some layers of magnesite were recognised as
the same lithological unit as hosts the Keith River Gossan.
Fresh sulphides are disseminated, being mainly pyrite and
minor chalcopyrite.
In 1973 Esso Exploration and Production Australia Incorporated
(“Esso”) flew an extensive Input EM survey, followed
by regional and local geological reconnaissance, failing to
delineate areas warranting their further exploration.
From 1979 to 1986 Geopeko, initially solely and later in joint
venture with CRAE, conducted exploration. Geopeko's original
target was stratiform tungsten mineralisation of the Mittershill
type along the Arthur Lineament. The occurrence of mafic volcanics,
with deep-water quartzite, meta pelite and black shale, was
considered favourable but initial sampling was disappointing.
CRA extended the targets to include shale hosted lead-zinc
mineralisation.
Work done included reprocessing the Esso Input EM survey,
conducting a magnetic and radiometric survey. Follow-up work
included geological mapping, ground geophysics and stream
sediment and bedrock geochemistry. All targeted EM/magnetic
anomalies were found to be due to Permian black shales and
Tertiary basalt. Anomalous gold was found near the Arthur
River at 367300E/5442 000N4 (300ppb in minus 80 mesh samples
and 29ppb in cyanide leached samples) and this was unsuccessfully
tested with a few lines of shallow auger holes to find the
source.
Most of CRAE’s efforts were focused on magnesite. Interestingly
they found that the magnesite horizons carried traces of gold
and platinoids. Gold values ranged up to 0.4g/t, platinum
to 0.015g/t and palladium to 0.020 g/t. The gold was assumed
to be very fine grained because it was not observed in thin
section.
In 1990 Geopeko again was active in a search for gold and
base metals including stratiform Cu-Zn-Ag (Mt Isa - McArthur
River type) and stratiform copper-zinc deposits of the Besshi
Type. Work included a geophysical review (aeromagnetics and
gravity) and water geochemistry. The water geochemistry program
gave results that were difficult to interpret and so overall
this was not a viable program.
In 1987 Betoota Proprietary Limited (and others), held the
area but conducted only a desk review of previous exploration
and a geological interpretation based on aerial-magnetics.
Similarly in 1994 Allstate Explorations NL did interpretative
work on a 1993 government conducted magnetic survey, but no
ground exploration follow-up was done.
In 1996 Goldstream Mining NL/ Titan Resources NL carried out
only a few stream sediment samples before withdrawing from
the area.
Based on an independent geological assessment of the Australian
Manganese and Iron Projects located in the States of Western
Australia and Tasmania, Australia by Al Maynard and Associates.
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