SIMEC, owned by India's Gupta Family Group and operator of the Middleback Ranges mines and operations at Whyalla, was brought in by Havilah last year to assess the commercial viability of the projects, which are located near the New South Wales mining hub of Broken Hill and the Transcontinental railway.

 

Havilah found Maldorky in 2010 and Grants, in 2012, and more recently drilling within the Grants Basin has led to an upgraded exploration target of 3.47-3.79 billion tonnes of iron grading 23.9-27.6%. Diamond drilling earlier this year to 624.4m returned an "exceptional" 486m continuous downhole thickness of iron-bearing sequence.

 

At the same time extensive metallurgical testing on Maldorky drillcore using a conventional processing circuit - crushing and grinding followed by gravity and magnetic separation -demonstrated the targeted product grade of 65% iron and mass recovery level of 40% can be achieved, as well as a high total iron recovery of 85%.

 

The diamond core from the Grants Basin is now being tested to validate the results for both deposits, which are geologically similar. 

 

The infrastructure review shows the existing east-west Transcontinental rail corridor can carry an additional 10Mtpa with only minor modifications, and there are a number of power options, although securing the large volumes of water remains a challenge.

 

The testing program also identified a potential opportunity to reduce the capital cost of comminution by employing alternative dry grinding technology that simplifies the circuit and eliminates the requirement for water in front end processing.

 

"The scoping study provides the platform for productive negotiations with Havilah on a commercial path forward for the Grants and Maldorky projects," SIMEC chief operations officer Matthew Reed said today.

 

Havilah technical director Dr Chris Giles said the work to date supports both resource drilling and progressing to a pre-feasibility study once the scoping study and exclusivity period are completed. 

 

Havilah had around $1 million cash at the start of the year and liabilities of $7.3 million.

 

Shares in the multi-commodity junior explorer were steady at 16c, valuing the company at $35 million.