The Winchester magnesium project comprises the development of a high-grade magnesite deposit located approximately 75km south from Darwin in the Northern Territory of Australia.
AusMag, a subsidiary of Australian mining and exploration company Korab Resources, is the owner and operator of the project.
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An initial feasibility study (FS) report was released in January 2015 and was updated in March 2018. The updated FS proposed a two-stage, bench-by-bench development strategy with estimated capital requirements at £1.38m ($1.78m).
The FS was further updated in September 2018 and April 2019, outlining the estimated initial rate of production at 630,000 tonnes (t) of saleable magnesium carbonate rock for the first year of operation.
Production is scheduled to commence between 2020 and 2021, while the mine life is estimated to be 12 years.
Location and site details
The Winchester mine is located on the mineral lease area ML30587 covering approximately 352ha. Korab was awarded the mineral lease for an initial period of 25 years with another 25-year extension option in October 2015.
The mine site lies approximately 85km away from the Darwin port and just 2km away from the regional centre of Batchelor in the Rum Jungle, Northern Territory. The Batchelor road approximately 5km away from the project transects Darwin to Adelaide railway line.
Darwin Port’s East Arm, which is located 93km to the north of the project, facilitates sea transport through a bulk materials handling facility, which consist of an 850m rail spur, 1,500t/h rail bottom dump station, stockpiles storage, haul roads, and a 2,000t/h travelling gantry ship-loader.
Geology, mineralisation, and resources
The Winchester magnesite deposit is situated at the western side of the Lower Proterozoic Pine Creek Geosyncline. It is a flat laying ore body with an unconsolidated soil and gravel overburden of up to 5m. The shallow cover of the deposit provides low waste to ore ratio for the project.
The rock mostly comprises metasediments aged between 2470 and 1870Ma. The main units that occur within the tenement area are Crater Formation, Coomalie Dolomite, Whites Formation, Mt Deane Volcanics, Wildman Formation, Koolpin Formation, Gerowie Tuff, Mt Bonnie Formation, and Burrell Creek Formation.
Mineralisation found in the area includes sulphide, uranium, copper, cobalt, lead, and zinc.
The Winchester project is estimated to hold 16.6 million tonnes (Mt) of ore resources averaging 43.2% magnesium oxide (MgO).
Mining and processing at Winchester magnesium project
The conventional open-pit mining method, using shovel, truck, drill, and blast operations, will be implemented at the Winchester mine. Blasted material will be excavated by hydraulic excavators and trucked to the Darwin Port for export.
The developer plans to establish an open-pit quarry in stage one development followed by another open-pit in stage two.
The mine will produce magnesium carbonate rock with a waste stream comprising dolomite, magnesite fines, waste rock, and talc.
The raw magnesium carbonate rock will be crushed and screened on-site and processed off-site in kilns owned by third parties to produce high grade caustic calcined magnesia (CCM) and dead burned magnesia (DBM) by way of toll-processing.
The mine site will receive electricity supply from the Batchelor town. Accommodation facilities will also be built in the Batchelor town and in Darwin.
Project financing
Mr. Hong Wang, who represents interests in various industries including the Chinese steel industry, banking and finance, and construction and building material, signed an agreement with Korab to provide approximately £4m ($6m) in funding for the development of the Winchester mine in 2016.
Mr. Hong Wang subscribed to a direct equity interest of up to 30% in AusMag. The contract also includes a subscription to ten million shares in Korab for a cash injection of $500,000.
The deal was facilitated by the Indian Ocean Group, who acted as the brokers and advisors for the placement.
Offtake agreements
Korab Resources entered into a nonbinding agreement with the Poland-based ZM Ropczyce to supply up to 20,000t of DBM per year in March 2019. The scope of the agreement also included providing research and development support in exchange for the supply.
Magnesium oxide market
The global magnesium oxide market is currently dominated by China and North Korea and is worth £48bn ($60bn).
The magnesium oxide is mainly used in refractory bricks, production of fire-resistant and moisture-resistant building materials, as well as the production of alloys used in vehicles including cars, airplanes, and tanks, among others.
The development of magnesium-ion batteries has added to the current market demand for magnesium.
