(MENAFN - ProactiveInvestors - Australia) Shree Minerals (ASX:SHH) has today received Commonwealth government of Australia approval for mining to commence immediately at the Nelson Bay River Iron Project (NBR) in north-west Tasmania.
Shree has not been idle waiting for it ticking off milestones on the road to production:
- Port Access: MOU with Grange Resources
- Offtake Contract: MOU with Large International Trading house
- Funding: Advanced stage of discussions with Banks for Debt Funding
- Mining Contractors/Equipment Suppliers: Advanced stage of discussions
Today's approval in detail
The approval comes after an extensive and comprehensive assessment process to confirm that the mine will proceed in accordance with best practice environmental management, including measures to prevent acid drainage, to protect and enhance wildlife habitat and to minimise the risk of road-kill.
Shree chairman Sanjay Loyalka said the company is excited about the prospects of developing the mine, which will be a benefit to the Tasmanian community.
"A new mine in north west Tasmania will provide very significant social and economic benefits to the region. In addition, the mine will generate royalties and payroll tax for the state government."
He stressed that the footprint of mining is very small in relation to the economic benefits that can be obtained and said that the approval decision represents a balanced approach to land management.
"We are particularly keen to create employment opportunities for young Tasmanians, to allow them to stay and prosper in the own community and not have to leave the state.
"The environmentally responsible use of mineral resources can help Tasmania develop greater economic self-reliance and help pay for the public services that all Tasmanians need."
The production schedule for the first two years comprise the mining of DSO iron ore, which requires no further beneficiation to produce a marketable product, and only needs crushing and screening.
Two separate DSO pits are planned in the first two years (comprising DSO South Pit & DSO North Pit which is within the BFO resources).
This is based on the two pits of approximately 815,000 tonnes of DSO ore at a grade of 57.5%.
The company plans to mine the DSO first followed by BFO material, and then the magnetite resource.
The NBR project will be profitable at current iron ore prices despite smaller size (v typical iron ore projects).
NBR will have accessible good infrastructure and availability of experienced labour force.
Shares on issue are tightly held at 95.9M at a Market Capitalisation of 19M. Cash in hand is 2.5M.
Perhaps missed by some investors, is that that Shree has the potential to earn 16 million to 18 million over two and a half years with little CAPEX and be highly profitable at current iron ore prices.
Against a Market Cap. of around 19 million places Shree at a signficant discount to its intrinsic earnings valuation.