Monday, 25 July 2011

TNG Limited's Mount Peake Iron-Vanadium Project set to gain from access to infrastructure

TNG Limited (ASX: TNG) is in initial negotiations with a number of parties on key infrastructure requirements for the Mount Peake Iron-Vanadium Project that could potentially make it one of the lowest-cost ferrous projects in Australia.

Infrastructure negotiations commenced on the company's 100%-owned Mount Peake Project in the Northern Territory as part of the ongoing Pre-Feasibility Study (PFS) for the project's development, which is on schedule and on budget for completion in October 2011.

The ability to access port and rail have confirmed available capacity and the supply of cheap gas power to the project site has the potential to make the project one Australia's lowest-cost ferrous projects.

Operator of the Adelaide-to-Darwin rail line, Genesee & Wyoming Australia Pty Ltd, has indicated through preliminary talks that the line can accommodate the transportation of product from the Mount Peake Project to the Port of Darwin.

Once TNG's requirements have been better defined in the current PFS, Genesee & Wyoming has indicated its willingness to work with the company to negotiate commercial arrangements for access to the rail line.

Preliminary discussions with the Darwin Port Corporation for access to Darwin Port have indicated that the container loading facility is under-utilised and will be able to accommodate TNG's proposed container shipments from 2014.

The Darwin Port Corporation has confirmed that it intends to work with the Mount Peake Project.

NT Gas and Power and Water Corporation (PWC) has indicated that it would be able to supply gas to the Mount Peake Project and could assist in packaging a gas and pipeline solution.

TNG and PWC have entered into a confidentiality agreement to progress commercial discussions on the potential supply of gas to the Project.

NT Gas operates the gas pipeline between the Amadeus Basin and Darwin, and has indicated that the pipeline has available capacity to supply gas to Mount Peake.

NT Gas can provide a package to supply gas from the pipeline to the Project site, and TNG and NT Gas have entered into a confidentiality agreement to progress commercial discussions.

The availability of potentially cheap gas power is a major advantage for the Mount Peake Project development. TNG's aim is that the Project will be entirely gas powered.

In addition, preliminary discussions have been held with Ausfuel Gull regarding the supply of diesel to the site.

Based on preliminary estimates, Ausfuel Gull has indicated that it would be able to supply diesel to the Project and could assist in packaging a solution for on-site storage facilities.

Discussions have been held with the Department of Resources (DoR) and the NT Major Projects group. The DoR is the lead agency at this stage of the development, and is supportive of the Project.

Involvement by the DoR and other NT Government agencies generally increases after the Project has demonstrated feasibility.

Engineering, process design, hydrology, Native Title and environmental studies are underway as part of the Mount Peake Pre-Feasibility Study.

Mineral Engineering Technical Services Pty Ltd (METS) is progressing with work on the process design criteria, process flow sheets, process description and mass balance for the Mount Peake process flow sheet, with 80-90% of work completed.

Also, detailed infrastructure costing and full CAPEX is in development for the project.

The company said reverse circulation resource drilling is progressing ahead of schedule and should be completed prior to August, with the aim of upgrading the current JORC resource.

The 2,700 metre drill program forms a critical part of the ongoing PFS. In addition, TNG is also testing two new geophysical targets that lie outside of the current resource envelope.

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