Alien Metals takes wraps off Hancock development study

Alien Metals unveiled promising outcomes of a development study on its Hancock Iron Ore Project in Western Australia's Pilbara region on Thursday.

The AIM-traded firm said the study, facilitated by Mining Plus, Burnt Shirt and internal personnel, was anchored by an updated mineral resource estimate which boasted a JORC mineral resource of 8.4 million tonnes at 60% iron.

With an upgraded indicated resource of 4.5 million tonnes at 60.2% iron and eight million tonnes of the mineral resource earmarked for conversion to mining inventory, the project had solid financial metrics.

Alien said key indicators included an average annualised EBITDA of AUD 39m (£20.09m), a pre-tax 10%-discounted net present value of AUD 146m, and a pre-tax internal rate of return of 133%.

Operating with an all-in sustaining cost of $85 per tonne and a production rate of 1.25 million tonnes per annum, the project demonstrated strong potential for profitability.

The firm said the development study also emphasised the project's operational viability and cost-efficiency.

Confidence in capital and operational costs was bolstered by up-to-date tendered pricing for over 90% of expenditures.

Initial production plans prioritised the exploitation of a 3.9 million tonne mining inventory, with scope for further upside through tapping into the entire mineral resource and ongoing exploration activities.

Using a mobile dry crushing and screening plant, the ore processing strategy was geared towards producing 1.25 million to 1.5 million tonnes of 100% fines product annually.

Notably, the proximity to the mining hub of Newman contributed to cost reduction by circumventing extensive construction expenses.

Moreover, provisional export capacity through the port of Port Hedland had been secured, pending final approvals expected in the first half of 2024.

“The development study is a significant advancement and de-risking step for the Hancock Project,” said non-executive chair Alwyn Vorster.

“Attractive project economics highlight the robustness of the project with its low start-up cost, sustainable operational costs along with the significant upside from future exploration plans.

“The geological review recently undertaken reinforces that the Hancock Project has significant regional exploration potential to increase the resource base through further exploration activities, supporting the company's future growth and expansion aspirations.”

Vorster said Alien was confident that the global iron ore industry had a “bright future”, underpinned by ongoing high demand for quality iron ore from stable jurisdictions like Australia, where high environmental, social and governance standards were set in the production of raw materials.

“Healthy iron ore prices as experienced over the last few years will support the Hancock Project delivering shareholder value in the medium term.”

At 1354 GMT, shares in Alien Metals were up 9.06% at 0.2p.

Reporting by Josh White for Sharecast.com.