Shree Minerals is due to start mining ore next month after a third party group said it would not proceed with a challenge to approval of Shree Minerals' iron ore mine at Nelson Bay River iron ore mine on Tasmania's west coast. All requisite approvals have been received by Shree Minerals. Production could commence within a week or two at project, mine development is advanced production will start early October.

 

One of the contracting groups for the mine said that the project was on track to be digging ore by October 4. It is understood that mine development and construction work could be 90% done. With the iron ore price for 62% Fe iron sitting at a robust USD 132.40 a tonne, when translated into local currency, a price of AUD 141.30 provides a very strong outlook for revenue generation for Shree as it becomes the next iron ore producer in Australia.

 

Nelson Bay River is located in the west coast of Tasmania, in an area rich with infrastructure including proximity to roads and port. Highlighting the prospectivity of the area, it hosts world class mines including Grange Resources' Savage River, Vedanta's Mt Lyell, Unity Mining's Henty and MMG's Roseberry and Avebury.

 

Nelson Bay River currently has a goethite hematite Inferred Resource of 1.4 million tonnes, magnetite Resources of 7.8 million tonnes at 38.3 DTR. Production is expected to be about 400,000 tonnes per annum.

 

The hematite ore is similar to ore found in Western Australia's Pilbara region; low alumina and a premium product and easy to extract. The production schedule for the first stage of the project is to develop two relatively shallow open cut mines to produce direct shipping grade hematite ore, which will require just crushing and sizing.

 

Production from Nelson Bay River should generate AUD 110 to AUD 130 million for the mining of DSO+BFO material which will generate strong near term cash flows in 2013 to 2014 and transform Shree Minerals from explorer to producer. Projected earnings from Stage 1 NBR Project for Shree Minerals are compelling with potential to earn between AUD 16 million to AUD 18 million over two and a half years.