LOVELOCK - Recent exploratory drilling has revealed shallow deposits of high grade iron ore at the Buena Vista Iron Project in north Churchill County. The assays are attracting global interest in Nevada Iron LLC, operator of the mine.
Last month, the sale of 6.8 million Nevada Iron shares raised a total of $1.15 million from Australian, Canadian and European investors.
The assays confirm extensive magnetite deposits in the "Section 5 magnetic anomaly" area of the mining project. Core samples show accessible magnetite deposits within a mile of the proposed ore processing plant. Section 5 is one of several magnetic anomalies located near the plant site.
"Section 5 is shaping up to be a major deposit with initial indications from recent drilling suggesting the mineralization is much larger than the defined exploration target of 10 to 12 million tons at 18 to 26% total iron," states Angela Kean in a recent story on Nevada Iron for Proactive Investors Australia.
On Monday, Nevada Iron Project Manager Chris Tanner confirmed the story is more than hype and that expanded iron resources have been discovered at Buena Vista.
"We got a lot of (exploratory) drilling done this summer and we're getting the assay results now," he said. "We're expanding the capacity of the mine from an annual production of 1.6 million tons of magnetite concentrate to 2.4 million tons- that's a 50% increase."
The magnetically-concentrated ore, containing 66 to 69% iron, is considered high quality partly due to the low content of sulfur, phosphorus and other contaminants, Tanner said.
"The resource is growing and it's all being defined right now," he said. "You build a model on a computer, based on the assays, that will tell you where your high grade, medium grade, low grade and barren materials. Then, the computer builds a pit design for the optimum cash flow. We'll have several different pits for several different deposits on the property. We're going to optimize production from two pits in order to maximize the high grade ore early in the process to recover our costs."
Construction of the mine infrastructure, redesigned for expanded production, should begin in early 2014, taking up to two years and employing approximately 500 workers, Tanner said. Mine production is expected to start sometime in 2016 requiring 200 to 250 people and lasting a minimum of ten years, he said.
Processing plants, pipelines and a power transmission line will be completed before the mine goes into production. The slurry pipeline will carry magnetite ore to an ore processing plant either at Colado Junction near Lovelock or to a plant site near Highway 95 and the railroad in Churchill County. A second pipeline will carry water extracted from the ore back to the mine for recycling. At this point, the most economical pipeline route has not been determined and it could go either way, Tanner said.
The refined ore will be stockpiled then shipped by rail for export from California to Asia, Tanner said. High-quality magnetite, such as that found at Buena Vista, is in demand for Chinese steel production.
"The most logical market is China," Nevada Iron Managing Director Max Nind said at a Lovelock town hall meeting earlier this year. "Unfortunately, America's got rid of all its steel plants."
The price of iron ore varies and is primarily controlled by the Chinese who operate their own low-quality iron mines, Tanner said. From a high of $180 per ton in 2011, the price dipped to $84 per ton and is now at a more than $100 per ton.
"The economics are there," he said. "The current iron prices are about $110 per ton and we're looking at a production cost of $60 to $70 per ton. The prices are unlikely to drop to a point where it's uneconomical."
The relatively clean and easily accessible ore at Buena Vista makes it an attractive site for the Australian-owned mining company. But, Nevada Iron must first complete the long and arduous task of state and federal permitting. That process will take about 12 to 15 months, Tanner said.
The summer's exploratory drilling included 47 reverse circulation and 12 diamond holes. Magnetic surveys also revealed substantial deposits of magnetite at the Buena Vista Iron Project, Tanner said.
Buena Vista mineral tax revenues will go to Churchill County where the iron mine is located but Pershing County should also benefit in terms of jobs, room tax revenue and other economic benefits, Nind said.
Over the summer, local motels, restaurants and other businesses profited as Nevada Iron drilling crews, geologists and officials spent their days working at the mine and nights resting in Lovelock.
"This is the closest town so there will still be a huge economic impact," Tanner said. "They're going to be buying food, buying gas, renting hotel rooms, looking for houses, renting spaces in the trailer parks. I'm not familiar with what the tax implications are for Pershing vs. Churchill County. We're still looking at what makes the most sense as far as which direction to go (with the pipeline)."
The Buena Vista mine was initially discovered in 1898 and intermittently mined in the 1950's and 1960's. U.S. Steel explored the site from 1961 to 1979 as a potential iron source.
Buena Vista includes 45 patented and 70 unpatented mining claims over about 40 square miles according the Nevada Iron website.
For more information on the Buena Vista Iron Project, go to www.nv-iron.com.
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