Talisman Mining Ltd

Iron Ore for Dummies

CONTENTS...............................................................................................................................i 1 2 3 4 5 6 7 8 9 11 HISTORY..........................................................................................................................1 GEOLOGY.........................................................................................................................2 STRUCTURE....................................................................................................................4 MINERALOGY.................................................................................................................4 TYPES OF ORE................................................................................................................5 ORE GENESIS .................................................................................................................6 METALLURGICAL PARAMETERS .............................................................................8 IRON ORE TO STEEL.....................................................................................................9 WONMUNNA PROJECT .............................................................................................10 WHY WONMUNNA IS ATTRACTIVE.......................................................................14

10 HOW WONMUNNA COMPARES ..............................................................................14

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Talisman Mining Ltd Iron Ore for Dummies 1 HISTORY The Iron Age: Classically the Iron Age begins around 1200 BC. This is almost 2000 years before the rest of the world! By 300 BC carbon steel was being produced in southern India and Sri Lanka (by what we today call the crucible method. could be removed. It was not until 1915 that a successful large scale iron works was established at Page 1 . This process drastically increased the ease in which impurities. Asia and Africa. Europe. developed in the 1700s). Large scale inexpensive industrial manufacturing of steel from pig iron became possible with the development of the Bessemer Process in Sheffield England in 1855. By 200 BC iron smelting was common around the Mediterranean. These ancient tools and ornaments were fashioned from meteorites! Since meteorites are metallic iron and nickel. they effectively became the first stainless steel tools in the world. The Iron Age is designated by the beginning of purposeful iron smelting first occurring in Anatolia (Modern Turkey) around 2000 BC. especially carbon. The Iron Age Comes to Australia: The first serious attempt to establish an iron industry in Australia appears to have been the Fitzroy Works near Mittagong NSW between 1848 and 1855. Although technically successful the project failed due to economic reasons. It is also believed that iron smelting was independently developed along the Ganges River of Modern India around 1800BC and in the Termit Massif of Modern Niger in 1500 BC. The first elementary Blast Furnace (producing pig iron) was developed in China by 500 BC. however. the oldest iron artefacts ever found are from 4000 BC in modern Egypt.

By 1966 Australia became a major exporter of iron ore as Koolanooka (near Morawa). These alternating laminations are caused by chemical. By 1960 the export ban on iron ore had been repealed due to the discovery of large deposits in the Hamersley Basin. There are two styles of Banded Iron Formations: Algoma Style BIFs are related to submarine volcanism. The Wundowie plant provided all pig iron needed for Western Australia and began exporting in the mid 1950s. really long time ago) and are typified in WA by the Midwest deposits (Koolyanobbing. During 2007-08 Western Australia produced 291 Million tons of iron ore for a value of over $20 Billion comprising 18% of the world’s iron ore production. but the iron ore was shipped from Iron Knob in South Australia. In 1951 BHP began shipping iron ore to other Australian States from Cockatoo Island in the Kimberley. They are generally meters to tens of meters thick and have limited extents. Jack Hills. Page 2 . Iron ore. Mount Goldsworthy and Mt Tom Price began production. by the BHP Company Ltd. the plant created charcoal from the nearby hardwood forests. Yarrie. As no suitable coking coal existed nearby.Talisman Mining Ltd Iron Ore for Dummies Newcastle NSW. And Finally to Western Australia: Ironically one of the worlds premier iron ore provinces was last to be discovered! The ‘Iron Age’ was introduced to Western Australia in 1948 through the development of a stateowned plant at Wundowie. Mt Gould. 2 GEOLOGY Banded Iron Formations: Banded Iron Formations (BIFs) are chemically precipitated sedimentary rocks that consist of alternating silica rich chert bands and iron rich iron oxide bands (magnetite / hematite). They occur primarily in the Archean (really. initially sourced locally. Coking coal was obtained near Newcastle. biological or seasonal variations during the time of deposition. Mt Magnet) and the NE Pilbara deposits (Mt Goldsworthy. These formations require additional geological processes to upgrade the material to ore grade. was then trained in from Koolyanobbing.

although unenriched magnetite BIFs are gaining momentum in WA due largely to substantial Chinese investment.Talisman Mining Ltd Iron Ore for Dummies Nimmingarra. bog iron. Detrital Iron Deposits Detrital Iron Deposits (DIDs) form from the erosion of enriched BIFs. direct precipitation & unenriched BIFs. etc). As a result of their genesis they are also generally associated with massive sulphide deposits and host a number of major gold deposits in Western Australia’s Yilgarn Block. This formation is Other Iron Formations An iron formation is any rock that contains more than 15% Iron. laterite. In WA these are either non-existent or play minor roles. however. Abydos. They occur at the Archean-Proterozoic boundary (really long time ago). and Superior Style BIFs are deposited in marine waters as a result of the oxidation of the earth’s atmosphere and hydrosphere. and are typified in WA as the Hamersley Basin deposits across the Pilbara (Mt Whaleback. They formed over the BIFs of the Hamersley Basin and either formed round balls (pisolites) by the break down of laterite or by “snowballing” as they rolled through ferruginous dust down to the old river channels. iron carbonate. Yandicoogina. Channel Iron Deposits Channel Iron Deposits (CIDs) are pisolitic hematite-goethite ores that filled old river channels a mere 14 million years ago (quite recent). Shay’s Gap. are costly due to the fine grained nature of the magnetite which necessitates a significant investment in the grinding process before magnetic separation. As a result. Mining Area C. etc). typified by Yandi. They generally form small scale. Mt Tom Price. gossans. secondary deposits. but at the time they looked good to investors! Page 3 . Hope Downs. These WA deposits. They form down slope from outcropping BIFs as chunks of BIF break off and fall down hill. they are laterally and vertically extensive covering thousands of square kilometres and hundreds of meters thick. Other iron formations that constitute ore elsewhere in the world include magnetite skarns. Robe River and Pannawonica deposits. This is why many promoted magnetite deposits are not being developed. Pardoo. They occur primarily in the Pilbara and are only known to exist in one other locality globally (Kazakhstan).

Page 4 . flat on top. Channel Iron Deposits As channel iron deposits are recent. however they are not as important as they will form much less than 10% of the total deposit. and essentially are considered gangue (waste) minerals. And since they infill old river valleys. This principle states that layers of sediments are originally deposited horizontally (I realise this is as amazing as describing gravity. Limonite is still used as a catch all phrase for hydrous iron oxides. one of which is. These are called doubly plunging anticlines and synclines. Over time really old rocks. These orogenic events produced refolded folds and structures in the south (where deformation was most intense) that resembles an egg carton. rounded on bottom. Limonite was a considered a mineral until the 1960s at which time mineralogists realized that it was primarily goethite. There are typically many other iron-minerals present in an iron ore deposit. they have not experienced any deformation. but bear with me). like BIFs. each resembling keels of boats. long. it forms a series of peaks and troughs. the principle of original horizontality. Occasionally these keels are cut by faults resulting in either shifting the bodies vertically or horizontally from each other. 4 MINERALOGY The minerals that make up iron formations are relatively simple and straight forward Ore Minerals Magnetite Hematite Goethite Compostion Fe3O4 Fe2O3 FeO(OH) Iron (%) 72% 70% 62% In regards to the Hamersley Basin the structure is defined by a number of deformation events from when the Yilgarn Craton and Pilbara Craton collided (in an orogeny). these are anticlines and synclines respectively). In the north (far away from the collision) the BIFs are nearly flat lying. they are shaped like a river channel. As a result. This informs us that all sedimentary rocks (which BIFs and CIDs etc fall under) were originally flat. narrow. like a piece of paper or handkerchief. experience heat and stress through the processes of deformation and metamorphism during orogeny events (‘orogeny’ being Greek for ‘mountain generating’). Martite is hematite that has taken the appearance of magnetite in crystal structure or shape. Other minerals you may come across include martite and limonite.Talisman Mining Ltd Iron Ore for Dummies 3 STRUCTURE Banded Iron Formations In Geology 101 all young rock-lickers learn Steno’s Principles. these flat bodies take on any number shapes (envisage simply pushing two ends of a piece of paper together.

and Microplatey Hematite (mpl H) These are the premium high grade hematite ores of the world. all with martite and often primary hematite. but have experienced more volume loss through the removal or conversion of goethite to hematite. Si and P) due to its nature as a hydrous mineral (like an amoeba that captures loose Al. like rain water and ground water). Weathering Weathering affects all ore types in various ways. Like the M-G ores. These ores are typically related to present erosion surfaces and contain abundant hydrous iron oxides. These goethite rich ores range from firmly indurated (hard) material to leached ore with very friable (soft) yellow ochre. It also is the culprit for the LOI (Loss On Ignition). supergene means enriched by waters from above. coarse macrobanding and microbanding are well Page 5 . These affects are often mistaken for supergene enrichment as opposed to superficial alteration. which is a major P carrier. This weathering process forms three zones from the surface: An outcropping zone with preserved BIF texture and dehydrated goethite producing hematite. 5 TYPES OF ORE Martite Goethite (M-G) The major ore type of the Hamersley Basin. While hypogene means enriched by water from below. Leached BIF Residual concentrates of iron oxides in areas of high rainfall.Talisman Mining Ltd Iron Ore for Dummies It should be noted that while goethite is an ore mineral it is also known to be a significant source of deleterious elements (Al. The ore ranges from high grade residues of partially oxidized magnetite to highly siliceous but friable BIF. These ores are derived from BIF by direct dissolution of the gangue materials by ground water to give residual iron oxides. Si and P during growth). which is why goethite deposits are inferior to microplatey hematite deposits). Phosphorous levels depend on the apatite content of the parent BIF and the post enrichment leaching of goethite. readily upgraded by magnetic or density methods. generally accepted as being formed by supergene processes (note that Supergene is the antithesis of Hypogene. ie. hydrothermal waters. Not believed to occur in the Hamersley Basin. preserved. A highly modified hydrated zone with no preserved textures and aluminous goethite.

the high grade iron ores were deposited as they are by gravity flows. 6 ORE GENESIS There are many many different theories out there for the genesis of High Grade BIF Iron Ore Deposits being published from the 1960s through to today. Supergene Metamorphic Model .this model contains the supergene model in as much that meteoric waters oxidize the magnetite. and Syngenetic Models .Talisman Mining Ltd Iron Ore for Dummies The ore proper which may be affected by moderate levels of post-enrichment processes including the leaching of goethite. creating martite. as apposed to chemical. and gangue minerals are removed or converted to goethite. These ores then undergo varying degrees of supergene enrichment that strips the goethite creating the low P. West Angeles. or a clastic remobilization of the chemical BIF. and there is still a distinct lack of consensus on many key elements important to the process. proposed for microplatey hematite deposits.used in describing the iron ores of the Yilgran block and NE Pilbara. microplatey hematite deposits. A supergene role is fairly accepted as the genesis model for martite goethite deposits (MAC. These ores result from hot hydrothermal fluids rising through the BIFs stripping away gangue minerals and leaving behind coarse grained hematite. So that certain areas originally created chert free BIF and the rest created cherty BIF. microplatey hematite ores such as those found at Tom Price and Whaleback. the main genotypes are: Hypogene Model . hot hydrothermal fluids strip silica from the BIF and introduce siderite and apatite.in this model. Supergene Hypogene Model . the gangue materials are stripped away by an old supergene process and then further upgraded by hydrothermal fluids. but instead of hydrothermal fluids simply stripping away and upgrading the deposits. oxidize the magnetite to martite. much like a placer deposit. Hope Downs). This assumes a clastic nature to the deposition of BIF. Hypogene Supergene Model .in this model. Then meteoric (surface) waters strip the apatite out and oxidize the siderite to microplatey hematite and Page 6 . It appears that the main disagreements are with the formation of the high grade. low P.used most convincingly (simplistically) and primarily for the iron ores of the Yilgarn block such as Koolyanobbing and the NE Pilbara such as Goldsworthy. although with some disagreement on timing. The ores then undergo metamorphism (heat and pressure) creating hematite with some residual goethite. However. Supergene Model . This accounts for 90% of the BIF deposits in the Hamersley Basin.in this model gangue minerals are removed from the BIF or converted to goethite by meteoric weathering and flowing ground water.


Most Australian ore is blended with ‘cleaner’ Brazilian ore due to the high concentrations of these elements in Australian ore. it means that the ore will be of lower grade and that more material will need to be shipped.Sulphur makes iron brittle and worthless when hot and prevents welding.20/t penalty on all ores for every 0. Phosphorous . and Loss on Ignition (LOI) . Sulphur . the water will be driven off during the Deleterious Elements Deleterious elements affect the chemical and physical properties of the molten material in the blast furnace. Generally. Additionally the sulphur can be eliminated by calcining. Additionally.10/t penalty on lump and $0. there is a $0.unlike the previous two elements. there is $0. silica is fluxed or removed from the iron melt by limestone. However. Alumina . This will slow the descent of charge and prolong the iron making process.50/t penalty on all ores for every 1% by which the alumina content exceeds 1. the minable resources of the Hamersley Basin would treble.during the making of pig iron in the blast furnace. Page 8 . Generally. there is no set market price for iron ore. additional time and resources are required by steel makers to remove or dilute the contaminants to workable concentrations. Unlike gold and base metals.05%.5%. Since it can not be removed. it makes it harder to remove the slag from the furnace.Talisman Mining Ltd Iron Ore for Dummies 7 METALLURGICAL PARAMETERS Once an iron enriched body has been found there are some key characteristics about the mineralization that will affect the price received for the mined product. A steel maker would either have to blend the ore to dilute the alumina or increase the lime flux to decrease the viscosity. Phosphorous does not affect the slag as it is not removed by slag. Why not a deleterious element in and of itself.Alumina doesn’t affect the quality of the iron as much as it increases the viscosity of the slag making it thicker. As a result. there is a $0.5%. more flux and coke must be used to remove it (more slag to deal with) or other ores or scrap metal low in silica must be blended with the high silica ores (more expensive material).LOI is a measure of the water contained in goethite. Generally. As such it is the individual contracts and not the market that determines how much a mine will receive for its ore. It instead stays within the iron melt and in excessive quantities makes the resulting steel brittle and worthless.40/t on fines for every 1% by which the silica content exceeds 1. The main deleterious elements are: Silica . ores must have low P concentrations or be blended with low P ores.01% by which the phosphorous level exceeds 0. This resulting slag must be removed from the blast furnace and if it occurs in high concentrations. it is pertinent to address what they are generally interested in. The value of the ore ultimately depend on what the end user plans to use it for. If there was a way to remove phosphorous from iron ore. As steel mills consume 95% of iron ore. affecting the price received for delivered ore. modern steel makers use manganese to eliminate this problem. The CSIRO has been working on this problem with little success. In the case of fines.

The steelmaking process is as follows: 1. The molten iron is poured into a large refractory lined container called a ladle. This is done in the sinter (for fines) and Page 9 . China. Product between 6mm and 30mm is considered lump and smaller than 6mm is considered fines. 8 IRON ORE TO STEEL Iron ore products are primarily iron oxides. be it magnetite. As a result. Lump:Fine Ratios The lump:fines ratio refers to the size of the ore after blasting. The coke removes the oxygen from the iron. Only Australia. Thus to create iron for use in steel oxygen and other impurities must be removed from the iron ore. used as sinter feed). fines are sintered and agglomerated to produce a pellet or briquette thus increasing the costs.Talisman Mining Ltd Iron Ore for Dummies sintering process thus increasing the iron grade of the product. blast furnace (for sinter product and lump). If fines were fed into a blast furnace then they would smother the air flow. A premium is paid for lump as it can be fed directly into the blast furnace. Iron ore lumps and sintered fines mixed with coke and limestone in a blast furnace. producing CO2 and iron. hematite or goethite. The lime removes the silica and alumina creating a slag that floats on the molten iron. (This is what BC Iron is flogging). Limestone (calcium carbonate rock) and Air (Oxygen). CIS and America only produce fines. Iron Ore Fines (Iron ore smaller than 6mm. 2. Basic Oxygen Steelmaking The basic ingredients required are Iron Ore Lump (Iron ore between the size of 6mm and 30mm). South Africa and Brazil produce a lump product. mining. and crushing. Coking Coal (Coal that has been reduced to pure Carbon).

Approximately one year. Talisman decided to declare it was going to pursue the iron at Wonmunna. the market responded in such a way as to encourage Talisman to become an Iron Ore Junior. 5. iron prices were low and Poondanoo was not interested at the time. While FMG obtained the iron ore rights to Tom Price and Anticline. to test for Besshi Style base metal (copper/zinc/silver) mineralisation in the Jeerinah Formation of the Hamersley Basin. History The Wonmunna tenement was originally pegged by Steve Elliot in 2005. Page 10 . After the market didn’t react to the Boundary Gold Resource at Trillbar and the base metal drilling was not delivering much excitement.000 RC meters later Talisman Mining had an 80 Million ton Iron Ore Resource at the Wonmunna Project in the heart of the Hamersley Basin. remove carbon and other unwanted elements. $5 Million dollars. The material is then poured into a furnace with scrap metal and lime. 9 WONMUNNA PROJECT Following is a break down of the Wonmunna Iron Deposits along the lines of the previously discussed parameters. 6. Pure oxygen is blown into the furnance to increase the temperature. As the iron price had recently jumped to historic levels and iron stocks were all the rage.Talisman Mining Ltd Iron Ore for Dummies 3. 4. After testing the potential and realizing the low grade of the CID. along with Tom Price and Anticline. The molten material is poured into a ladle and alloying elements are added. As these tenements had no mapped Iron formations. Although one of the CID drill-lines happened to intersect high grade Marra Mamba Formation beneath the CID cover. Poondanoo backed out reverting the iron rights back to Talisman. The molten material is then poured into its shapes and the slag removed. private company Poondanoo took the iron rights to Wonmunna to test the CID potential. and 35. they were not held by the Big Boys allowing Steve to obtain a significant holding in the ‘Land of Giants’.

Minor Marra Mamba deposits are also mined at Mt Whaleback and Tom Price. This formation is broken up into three smaller BIF units called the Nammuldi Member. Ore Type The generalized ore type of the Wonmunna deposits is Martite–Goethite. Mineralogy The Wonmunna Iron ore deposits are dominated by goethite–martite–hematite minerals. but recent Nammuldi Deposits discovered by FMG and Hancock Prospecting are showing great potential. and FMG’s Cloudbreak and Christmas Creek. This formation is the oldest BIF in the Hamersley Basin and has been exploited in the Pilbara since the 1970s. Wonmunna is believed to contain all three members with mineralisation hosted within the Nammuldi and the Mt Newman members.Talisman Mining Ltd Iron Ore for Dummies Geology The Iron deposits at Wonmunna are hosted by the Marra Mamba Iron Formation. Modern Marra Mamba Iron Deposits are mined at BHP’s Mining Area C. The Mt Newman member has historically been the most economic. Structure The shape of the Wonmunna Iron Deposits is that of a boat keel with the majority of mineralisation located in the center of the boat. The mineralisation can be broken up roughly into Page 11 . Rio Tinto’s West Angeles and Hope Downs. the McLeod Member and the Mt Newman Member. More detailed work into the identification and quantification of the ore minerals is being completed by an Honours student through the University of Wollongong.

85 0. and CMM) appear.10 Phosphorous Penalty $ 0.07 0.40 0.275 0.55 2. It is Silica Penalty $ NMM Resource NMM DSO Resource CMM Resource CMM DSO Resource SMM Resource SMM DSO Resource Total Resources Total DSO Resources 1.10 0.05 0.06 0.8 3.15 0.35 1. This too will be addressed through the detailed work being completed by the University of Wollongong Honours Student. important here to point out that the three deposits (NMM.40 .95 1.4 15.7 7. Alumina Penalty $ 1.4 78. and Upper Low Grade Ore Zone.3 10 L:F 60:40 60:40 65:35 75:25 75:25 75:25 65:35 65:35 Fe % 55.3 0.7 P% 0.08 0. Metallurgical Parameters The effect of the deleterious element concentrations within the Wonmunna Resource is outlined in the following table.9 61.10 1.60 Total DE Penalty $ 2.35 0. a Middle High Grade Ore Zone and a Lower Low Grade Ore Zone.7 1. superficially.2 15.07 0.2 55.1 0.6 3.6 1. More detailed work into the identification and quantification of the ore minerals is being completed by an Honours student through the University of Wollongong.05 0.60 2.07 0.5 7.9 6.7 3.3 1.Talisman Mining Ltd Iron Ore for Dummies MT NMM Resource NMM DSO Resource CMM Resource CMM DSO Resource SMM Resource SMM DSO Resource Total Resources Total DSO Resources 47.10 Page 12 Ore Genesis The Wonmunna Iron Deposits are believed to be the result of supergene enrichment that has been over printed by weathering. to differ in their genesis as reflected in minor chemical. physical and spatial variations.2 56 61.05 1.8 1.08 LOI % 8.20 0. SMM.2 2.4 56.00 1.40 1.8 61.925 1.2 6.6 9.925 2. expressed as a potential cost impact on ore price.9 7.1 0.9 1.3 SiO2 % 6.3 6.60 0.2 7.40 0.15 0.9 3 5.2 9.6 3.90 0.3 61.4 9.1 Al2O3 % 3.45 1.375 1.00 0.7 3. The upper and lower ore zones are dominated by goethite while the middle ore zone host significant martite and/or hematite mineralisation.85 0.7 2.3 three layers.

Page 13 .Talisman Mining Ltd Iron Ore for Dummies Infrastructure Considerations Wonmunna is located 80 kilometres from Newman along the Great Northern Highway. This prime location places Wonmunna within 25 kilometres of Rio Tinto’s Hope Downs and West Angelas Mines and BHP’s Mining Area C.

6. There is also a spread sheet in the Appendix that contains all the raw data for the 75 deposits included in this comparison. Each Deposit contains a High Grade Core that legitimately satisfies DSO requirements. It is important to note that these values are referenced from deductions for Brazilian Ore and are themselves generalisations. these will be smaller and usually of higher quality. Premium Lump:Fines Ratio that is uncharacteristic of Marra Mamba Ore Bodies. Geometrically Simple and therefore easy for orebody modeling and pit design. Potentially Low Mining Costs due to the low abrasiveness. hardness and competency of the ore. 5. I had to work with what I could get my hands on. 7. Multiple Rail Lines) and Existing Operations (Mining Area C. By their nature. Close to Infrastructure (Great Northern Highway. This means mining could consist of free digging instead of blasting with low wear and tear on equipment. 100% Owned by Talisman Mining Other Iron Ore Junior’s Deposits The comparison parameters used in the graphs include: • • • • • • • Tonnage Iron Silica Alumina Phosphorous DE Penalties Ore Value The first five are fairly straight forward. 4. West Angelas). Hope Downs. 2. silica and phosphorous (section 7). The DE Penalty is calculated based on the previously outlined deductions for excessive alumina. You may observe that some of the deposits/mines have a ® label. Page 14 . 3. so do not be alarmed when you see that Whaleback has less than 400 Mt left! As most of this data (especially for the Big Boys) is not readily available.Talisman Mining Ltd Iron Ore for Dummies 10 HOW WONMUNNA COMPARES On the following pages you will find a series of graphs comparing Wonmunna to: • • • Producing Mines Other Marra Mines) Mamba Deposits (and 11 WHY WONMUNNA ATTRACTIVE IS 1. indicating that the numbers are for their Reserves as opposed to their Resources. Remaining Exploration Potential both within the orebodies and elsewhere within the Project. Actual values may and probably will vary. 8. Low Strip Ratio as the ore is flat-lying and close to the surface.

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