Shiyela Iron Project - December 2011

BACKGROUND

In 2008 DYL’s wholly owned subsidiary Reptile Uranium Namibia (Pty) Ltd (RUN) identified a substantial area of magnetite mineralisation on its 100% held Exclusive Prospecting Licence (EPL) 3496 (Figure 1) when an iron-oxide-copper-gold-uranium target returned a 340 metre magnetite rich drill intercept from near surface.

In 2010 following an internal review, a decision was taken to drill test two magnetic anomalies (M62 and M63) at Shiyela.  The review recognised that if these anomalies proved to be significant magnetite deposits a mining operation would have a number of natural competitive advantages, namely:

• Infrastructure advantage ~ 45 km by road from Walvis Bay deep sea port
• 10 km from the main C14 road that leads to Walvis Bay;
• 10 km from the Kuiseb electricity substation which currently supplies Langer Heinrich Uranium Mine
• Potential source of water in the Tubas channel to the north of the project area.
• Exploration upside associated with a regional aeromagnetic anomaly of 20 km strike
• That magnetite ore whilst lower in iron concentration than typical direct shipping hematite ore, can readily be upgraded using magnetic separation to produce a high-quality concentrate grading 68-71% iron (Fe).

Initial metallurgical testwork on the 2008 drill core returned a high-grade magnetite concentrate assaying 70% Fe with very low silica content and no deleterious elements (Al₂O₃, P, S).
 

The first phase of exploration commenced in mid-2010, with the objective of identifying an initial resource of 120 to 150 million tonnes containing 20 to 25% magnetite to 200 metres vertical depth.  If economically feasible such a deposit would sustain a 2 Mtpa (product) mine life for 15 years.

The exploration programme, which was completed in mid-2011, comprised 210 RC and DD holes for 38,473 metres of drilling, confirming strongly mineralised zones in both deposits with a hematite fraction in addition to the main magnetite mineralisation (Figure 2).  The M62 deposit was drilled along strike for almost a kilometre and over a maximum width of 500 metres and to a vertical depth of just over 300 metres.  The M63 deposit has a strike length of over 800 metres with a width of 500 metres and has been drilled down to a maximum vertical depth of approximately 300 metres.  Both deposits are open to depth and limited reconnaissance drilling has confirmed lateral extensions to M62.
 

The geophysical signature of the main zone of magnetic anomalism that hosts M62 is some 20 kilometres long and has yet to be drill tested for additional resource potential (Figure 3).

Golder Associates Pty Ltd (Perth) completed a maiden JORC Mineral Resource estimate for Shiyela (ASX 6 December 2011) returning an Inferred Mineral Resource estimate of 78.7 Mt at 18.88% Fe at 10% DTR* cut-off for the M62 and M63 magnetite deposits with an average DTR magnetite content of 16.17% (Table 1). 

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* DTR – Davis Tube Recovery

The resource drill out which included geotechnical core drilling and reconnaissance RC drilling totalled 202 RC holes for 36,277 metres and 8 diamond holes for 2,196 metres drilled over the two deposits M62 and M63.  A total of 141 holes were used in generating the wire frame models for both deposits.  DTR results from 1,699 four metre composite samples were used in the estimate (Figures 4 and 5).

Notwithstanding the 100 x 50 metre drill pattern the resource is classified as Inferred pending completion of outstanding DTC‡ multi-element analysis which ultimately is used to evaluate the overall quality of the magnetite concentrate product.

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‡ DTC – Concentrate recovered from the DTR testwork

Chemical assays conducted on over 100 concentrate samples produced from DTR testwork confirmed that the Shiyela Iron Project can produce excellent quality magnetite with exceptionally high iron content and low deleterious elements (Table 2).

The results showed that a Shiyela product is likely to:

• Contain around 70% iron (Fe)
• Have a very low Silica (SiO2) content significantly below 1%
• Have low alkali metals content within accepted levels and no other deleterious elements
• Be a low impurity concentrate suitable as a Blast Furnace product

Two phases of testwork have been completed by ProMet Engineers Pty Ltd (Perth) who have specialist expertise in the beneficiation, agglomeration and pelletising of all types of iron ores and an intimate knowledge of all aspects of iron and steel making technologies.

Previously reported (ASX 14 February and 18 October 2011) positive results from the various testwork programmes undertaken by ProMet led to a decision to go ahead with a Scoping Study.

The testwork completed by ProMet indicates that:

• A coarse grained (with 80% passing -150 micron (μ)) high quality Blast Furnace grade clean concentrate can be produced.
• The 69% Fe magnetite concentrate, with around 1.5% silica, has very low deleterious elements that should attract a premium price.
• The weight recovery from samples collected from the core was between 18% and 32%.
• Shiyela’s capital cost and energy consumption are likely to be comparatively low as a result of the coarse grained concentrate, with estimated plant CAPEX at ~US$100 per annual tonne of product.

A minesite-located process plant will be designed to produce a final product at 80% passing -150 μ using a wet Low Intensity Magnetic Separation (LIMS) circuit.  The basic flowsheet will consist of a two-stage crushing circuit followed by High Pressure Grinding Rolls and inter-stage magnetic separation producing a 400 μ pre-concentrate feeding a milling/magnetic separation circuit to produce the final product.  A schematic plan of the crushing and grinding circuit is given in Figure 7.

It is anticipated that the Blast Furnace grade concentrate will have similar characteristics to those obtained in previous tests, which were released by DYL earlier this year (Table 2).

Shiyela’s close proximity to the Walvis Bay port is a major advantage.  It is expected that initially the concentrate will be trucked to the port and therefore the moisture content of the product will be at an appropriate level to minimise dust (~9%).  However even at 2 Mtpa a slurry pipeline may be more cost effective and will be evaluated as a part of the scoping study.

A transhipment solution will be considered for Walvis Bay to address draught restrictions at the port.

Promet has commenced a Scoping Study for the Shiyela Iron Project in November based on 2 mtpa concentrate production.  A preliminary report is expected by end December.

Reptile Uranium Namibia Ltd (RUN) submitted a Mining Licence Application (MLA) to the Namibian Ministry of Mines and Energy on 11 December 2011 (Figure 1).  The application was made on behalf of a 95% owned subsidiary, Shiyela Iron (Pty) Ltd under section 91 of the Minerals (Prospecting and Mining) Act of 1992. Oponona Investments (Pty) Ltd, a local Namibian company and RUN’s empowerment partner, holds the remaining 5%.

A large diameter diamond drilling programme (PQ – 85 mm) has commenced to provide core for the next phase of metallurgical testwork to be conducted by ProMet, as a part of a planned Feasibility Study.  The programme will comprise at least 3 holes at both M62 and M63 for approximately 1,000 metres of PQ core to generate some 16 tonnes of mineralised material.

Subject to the availability of funding for the project  a programme of RC and diamond drilling to target  lateral and depth extensions to the M62 and M63 deposits will be conducted in 2012.  In addition the geophysical signature of the main zone of magnetic anomalism that hosts M62 is some 20 kilometres long and RC drilling to outline additional resource potential will also be undertaken (Figure 3).