NSL Consolidated commences construction phase at Kurnool iron ore project

NSL Consolidated, (ASX: NSL) the iron ore and thermal coal developer, is on track for a December 2011 commissioning of its US$2.3 million Kurnool iron ore beneficiation plant project in India.

The construction phase has commenced with work installing the plant footings. Delivery of key plant components to the stockyard site is on track to begin in the last week of this month, with the erection of those components to commence immediately upon their arrival.

NSL is developing the iron ore beneficiation plant on its 12 acre stockyard site at Kurnool in the southeastern Indian state of Andhra Pradesh.

The plant site is adjacent NSL’s existing Kuja iron ore mine and only 5 kilometres from the company’s Mangal mine, both of which are now being readied for mining and plant start-up.

NSL is the only foreign company to own and operate iron ore mines in India, which is the world’s third largest iron ore exporter, in parallel with having a strong domestic steel market.

The company’s first sales from Kurnool, scheduled for the 1H 2012, will represent NSL’s maiden revenue stream.

The Kurnool plant has the potential to lift NSL’s ROM iron ore grades to between 58-61% Fe from as low as 25-27% Fe, with good yield and recovery rates.

NSL’s trial mining operations and subsequent operational and financial modelling has suggested a return on capital within just three months of Kurnool completing full commissioning.

The plant has capacity of 196,000 tonnes per annum of concentrate, which NSL says will deliver a steady net cash flow of US$800,000 per month at full production (based on modelled iron ore prices and costs).

Further progress on Qld thermal coal approvals

In the second of NSL's bulk commodity strategy, Queensland authorities have confirmed to advertising approval for the Notice of Proposed Grant of Exploration Permit for coal for three of the company’s coal exploration permit applications, EPCA’s 2336, 2337 & 2338. The date of the advertising notice is yet to be finalised.

Approval to advertise a fourth application, EPCA 2198, an area totalling 232 km² over 75 sub-blocks located 75 kilometres west of Augathella, was secured last month.

The four thermal coal tenements cover 2,585 km² in the Eromanga Basin of southwest Queensland.

Independent geologists have estimated a combined exploration target of between 6.6 billion and 18.7 billion tonnes1 of thermal coal for EPCA’s 2198, 2336, 2337 and 2238.

NSL’s thermal coal holdings are adjacent to similar projects held by East Energy Resources (ASX: EER) and International Coal (ASX: ICX).

Originally published at: http://www.proactiveinvestors.com.au/companies/news/22407/nsl-consolidated-commences-construction-phase-at-kurnool-iron-ore-project-22407.html