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Outcropping at Razorback Ridge. Source: Magnetite Mines
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  • Magnetite Mines (MGT) opens the trading week green after releasing a pre-feasibility study (PFS) for its flagship Razorback project in South Australia
  • The iron ore miner says the PFS supports a maiden ore reserve for Razorback of 473 million tonnes based on a 12.8 million-tonne-per-annum throughput
  • Based on the study, Razorback has a post-tax net present value (NPV) of some $669 million over a mine life of 23 years
  • Magnetite CEO Peter Schubert says with a small-scale start-up, the company plans to ship its first iron ore from the Razorback project at the end of 2024
  • Shares in Magnetite Mines are up 5.19 per cent and trading at 8.1 cents each at 11:59 am AEST

Magnetite Mines (MGT) has had a strong start to the trading week after releasing a pre-feasibility study (PFS) for its flagship Razorback project in South Australia.

The iron ore miner told investors this morning the PFS confirmed the opportunity for a “high return, long-life” initial development of the Razorback resource.

What’s more, the PFS defined the scope for a Razorback definitive feasibility study (DFS), which Magnetite said it plans to release during the third quarter of 2022.

Magnetite said the PFS supports a maiden ore reserve for Razorback of 473 million tonnes based on a 12.8 million-tonne-per-annum throughput.

At an estimated average iron ore price of US$110 (A$146) per tonne, this means Razorback has a post-tax net present value (NPV) of some $669 million over a mine life of 23 years. In this scenario, the mine has an internal rate of return (IRR) of 20 per cent.

Other mining and production scenarios would see the mine operate for over 30 years with an NPV of $520 million and a 17 per cent IRR.

Magnetite CEO Peter Schubert said the PFS is a “significant milestone” for the company as it defines Magnetite’s scope for the iron ore project moving forward.

“The resulting scope meets our objectives of practical scale, capital efficiency, attractive returns, high-quality product and an expected low emissions footprint,” Mr Schubert said.

“The economic results are attractive and provide an excellent basis to continue towards development.”

He said with a small-scale start-up, the company is planning to ship its first iron ore product from the Razorback project at the end of 2024.

“We look forward to working with all our stakeholders to build a sustainable and viable long-term project that will bring a range of social and economic benefits,” Mr Schubert said.

To build the project, Magnetite predicts an initial capital investment of between $572 million and $675 million, with the project expected to have an average annual cash flow of around $141 million.

This means Razorback should take around five years to pay itself off, according to the Magnetite.

Shares in Magnetite Mines were up 5.19 per cent and trading at 8.1 cents each at 11:59 am AEST. The company has a $245 million market cap.

MGT by the numbers
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