(MENAFN - ProactiveInvestors - Australia) Dynasty Metals Australia (DMA: ASX) has held preliminary discussions with QR National (ASX:QRN) investigating the possibility of gaining rail access for the flagship Spearhole Project and the new tenement located 75 kilometres from the proposed rail corridor.
If this bears fruit, it would represent a significant breakthrough for Dynasty Metals given the potential upside from a future production profile of 5 million tonnes of iron ore per annum with rail access.
QR National is constructing a fourth rail line connecting from Port Hedland to East Pilbara.
The Spearhole Iron Project is located southwest of the Pilbara township of Mt Newman where BHP Billiton (ASX: BHP) operates the Mt Whaleback iron ore mine. The tenements are also adjacent to other major WA iron ore producers and explorers.
Dynasty also recently won the ballot for a highly prospective 92 square kilometre iron ore tenement just 15 kilometres southwest from Hancock Prospecting's Roy Hill Mine.
The company has been investigating a range of options in relation to possible access to infrastructure such as the requirements for road haulage, slurry pipeline, and rail and port capacity.
Although discussions with QR National are ongoing and there is no current agreement between the companies, Dynasty is confident of progressing discussions, as rail access is the preferred option.
The Spearhole Project hosts an Inferred JORC resource of 1.4 billion tonnes, including 932 million tonnes at 27.4% iron at a cut-off grade of 20% iron.
Beneficiation testing is underway and progressing well, focusing on the upgrading of midgrade " 40% to 50% iron " tailings from the beneficiation process.
The Spearhole Project, which is a low cost operation, will produce 120 to 170 million tonnes of iron ore concentrates according to the current beneficiation study.
A Scoping Study by MPS confirms the Spearhole Project as economically viable, producing 5 million tonnes per year over 25 years of mine life.
Iron ore production is slated for 2015.