FRS - Ferraus Limited

[motion]

Hi,

I thought I would start this on FRS -Ferraus Limited

An interesting mining company mainly doing Iron Ore. I think this has some nice projects in the pipe line and with the current ann out seems to be one to watch.

FerrAus Limited (FRS, previously NiQuest limited) is an Iron ore developer focused on the Robertson Range iron ore project located in Western Australia.

Robertson Range Iron Ore Project (100%):The Robertson Range iron ore project is located 100km southeast of Newman in the SE Pilbara region, Western Australia. Rio Tinto explored the area between 1999 and 2001 and identified iron mineralisation over approximately 1km strike length. Surface samples assayed greater than 65% Fe, and RC drill holes returned 10 metres @ 58.8% Fe from 18 metres depth and 30 metres @ 61.5% Fe from 88 metres depth. Follow-up drilling commenced in April 2006. The RC and Diamond drilling is designed to provide samples for ore characterisation test work, to test extensions of the mineralisation, and to increase the classification of resources identified to date. An inferred resource of 16.3Mt@ at 56.8% Fe, 0.09% P, 6.3% SiO2, 3.6% Al2O3 and 8.9% LOI has been estimated. The company hopes to conduct a feasibility study by August 2006, with possible mine development as early as Mid 2007.

Davidson Creek (100%):The Davidson Creek iron ore project is located northwest of Robertson Range and 30 kilometres east of BHPs mining operations at Jimblebar. Brockman Iron Formation, host to BHPs Mt Whaleback Deposits, is interpreted to occur within the tenement and represents a priority drilling target in 2006.

Murramunda (100%):Murramunda is a recent exploration licence application located between FerrAus Davidson Creek and Robertson Range licences. Geological reconnaissance and interpretation of regional geophysical data indicates that this licence area is prospective for both iron and manganese mineralisation.

Enachedong (100%):This tenement of 205km² is prospective for manganese mineralisation and lies about 60 kilometres south of Consolidated Mineral’s Woodie Woodie manganese operations in the Balfour Downs area. Exploration planned for 2006 includes geological mapping and surface sampling, interpretation of TM images, and trenching and RC percussion drilling.

 

[jman2007]

Hi,

I thought I would start this on FRS -Ferraus Limited

An interesting mining company mainly doing Iron Ore. I think this has some nice projects in the pipe line and with the current ann out seems to be one to watch.

FerrAus Limited (FRS, previously NiQuest limited) is an Iron ore developer focused on the Robertson Range iron ore project located in Western Australia.

Robertson Range Iron Ore Project (100%):The Robertson Range iron ore project is located 100km southeast of Newman in the SE Pilbara region, Western Australia. Rio Tinto explored the area between 1999 and 2001 and identified iron mineralisation over approximately 1km strike length. Surface samples assayed greater than 65% Fe, and RC drill holes returned 10 metres @ 58.8% Fe from 18 metres depth and 30 metres @ 61.5% Fe from 88 metres depth. Follow-up drilling commenced in April 2006. The RC and Diamond drilling is designed to provide samples for ore characterisation test work, to test extensions of the mineralisation, and to increase the classification of resources identified to date. An inferred resource of 16.3Mt@ at 56.8% Fe, 0.09% P, 6.3% SiO2, 3.6% Al2O3 and 8.9% LOI has been estimated. The company hopes to conduct a feasibility study by August 2006, with possible mine development as early as Mid 2007.

Davidson Creek (100%):The Davidson Creek iron ore project is located northwest of Robertson Range and 30 kilometres east of BHPs mining operations at Jimblebar. Brockman Iron Formation, host to BHPs Mt Whaleback Deposits, is interpreted to occur within the tenement and represents a priority drilling target in 2006.

Murramunda (100%):Murramunda is a recent exploration licence application located between FerrAus Davidson Creek and Robertson Range licences. Geological reconnaissance and interpretation of regional geophysical data indicates that this licence area is prospective for both iron and manganese mineralisation.

Enachedong (100%):This tenement of 205km² is prospective for manganese mineralisation and lies about 60 kilometres south of Consolidated Mineral’s Woodie Woodie manganese operations in the Balfour Downs area. Exploration planned for 2006 includes geological mapping and surface sampling, interpretation of TM images, and trenching and RC percussion drilling.

Hi Motion

Good to see a fellow Ferraus-ite on board. To be honest I thought I'd missed the boat on this one as I belatedly watched the market happily assign a value of 1.20 ish p/s recently, a hefty premium in my view. With trading back to more 'modest' levels, FRS possibly a good buying opportunity imo.
Cash reserves currently around $11.6M, with potential to add significantly more tonnage at Robertson range, add in Davidson Creek and you'd be looking at a fairly healthy reource.
Possible sticking points for me would be the BHP factor... if a rail sharing agreement failed to materialise, I guess FRS would be looking at a road train option to Port Headland from the Robertson Range area. Additionally, I don't know what the infrastructure constraints are at the port at this stage, if there is a proposed expansion of facilities it would hopefully tie-in with FRS's production start-up 2009 ish

jman

 

[grace]

Initial jorc for Davidson Creek is due Feb 08.
Maiden resource for new south west zone due late 08 (target 5-10mill tonne).

Top 20 seem to own a lot in this, and I have compared the list 6 mths apart and not very much movement.

Not a lot of traders on this one. Would you agree?

 

[Muschu]

Initial jorc for Davidson Creek is due Feb 08.
Maiden resource for new south west zone due late 08 (target 5-10mill tonne).

Top 20 seem to own a lot in this, and I have compared the list 6 mths apart and not very much movement.

Not a lot of traders on this one. Would you agree?

Hi
It's an interesting share and one that I have read some consider a quality take-over target. There are some impressive principal share-holders and you may have noticed a buy of almost 3 million shares on February 14. I have no idea where it is heading but am prepared to be patient. They're into iron ore in WA and their reports read well IMO.

 

[grace]

Initial jorc for Davidson Creek is due Feb 08.
Maiden resource for new south west zone due late 08 (target 5-10mill tonne).

Top 20 seem to own a lot in this, and I have compared the list 6 mths apart and not very much movement.

Not a lot of traders on this one. Would you agree?

Sorry, that should read maiden resource for new south west zone due late MARCH 08 (target 5-10 mill tonne).

Top 20 as at 28 September 07 = 69.06% Lots of funds in there.

 

[grace]

Well, lots of info due this month on Ferraus. Not really getting murdered by the market.
ABN Amro initial coverage rated a buy.

ABN Amro rates FRS as Buy - Initiation of Coverage - The broker estimates the Robertson Range project could produce 2m tonnes annually and together with Davidson Creek there is scope for the company to produce 5m tonnes per year.
Infrastructure remains a key and the broker sees scope for the company to form an alliance or sign a rail haulage agreement, while also positive is the company has enough funding in place to finance its 2008 development program.

Given the potential of the company the broker initiates coverage with a Buy rating.


Target price is $1.68 Current Price is $1.01 Difference:$0.67 - (brackets indicate current price is over target). If FRS meets the ABN Amro target it will return approximately 66% (excluding dividends, fees and charges - negative figures indicate an expected loss).

ABN Amro forecasts a full year FY08 dividend of 0.00 cents and EPS of -1.64 cents. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is -61.89.

Market Sentiment: 1.0

 

[grace]

Initial jorc for Davidson Creek out - all DSO 7.4 million tonne at 57.8%.

Also of note is new exploration target of 250 million tonne (was 200 million tonne) with 8 new targets of 30 million tonne each. Well this 8 targets is 240 million tonne for Davidson.......and we already have 30.6 for Robertson.....could be some nice surprises coming.

Currently have a jorc on Robertson Range of 30.6 million tonne at 58.7% with this to be upgraded this quarter.

Note that Davidson and Robertson are all located within the same area.

Mininig application for Robertson has already been submitted with an estimated time to start of 2009. Some 50 or 60 kms from rail line to jumblebar (please excuse if I have the name of your town wrong!) East Pilbara.

“This new resource confirms that multiple deposits of high quality, direct shipping iron ore occur within our exploration licenses. Our rapidly
growing resource base provides us with a great opportunity to increase
our production scale and support funding of transport infrastructure” said
FerrAus Managing Director - David Turvey.

7.4 Million Tonnes @ 57.8% Fe​

4.4% SiO2, 3.0% Al2O3, 0.077% P and 9.3% LOI
Calcined Fe = 63.7%​

​

This resource estimate is based on results from RC drilling reported to the
Australian Stock Exchange on the 17th December 2007. It was completed
by Coffey Mining Pty Ltd in accordance with the AusIMM JORC Code for
Reporting of Exploration Results (refer to attached resource statement).
Highlights & Future Work:

The initial iron ore resource at the Davidson Creek prospect
remains open both along strike and down dip (refer Figure 1).
Follow-up RC drilling is scheduled during mid 2008 with the
potential to increase this resource to 20 million tonnes.

FerrAus has identified eight (8) targets within the Davidson Creek
project area with exploration potential of each target being
approximately 30 million tonnes . RC drilling is currently underway on
two (2) targets located to the west of theDavidson Creek prospect.
Assay results are expected over the next several months, followed by
initial resource estimates.

Overall at the Davidson Creek project, systematic exploration of
existing targets has the combined potential to increase the resource
base to 100 million tonnes grading 57 to 60% Fe during 2008.

Along with the Robertson Range iron ore project, FerrAus believes it
has a “proven exploration record and is well placed” to ultimately
grow the resource base at its East Pilbara iron ore projects to 250
million tonnes.

Not as good as a reaction as I would have thought though???

 

[grace]

A second announcement out today with the initial jorc for the South West Zone. Also note 5 targets with 30 million tonne each. That makes 150 million tonne target for Robertson Range.

Earlier today, 8 new targets with 30 million tonne each for Davidson Creek. That makes 240 million tonne target.

All up I get 390 million tonne target.

Check my adds please. I get a lot more than the 250 million they state. Have I done something wrong???

“

The South West Zone resource contains high-grade iron ore from
surface and is located adjacent to the current resource at Robertson
Range. It will be included in mine planning studies as a satellite open pit,
which will add flexibility to mining operations and allow for higher
production rates” said FerrAus Managing Director - David Turvey.

5.0 Million Tonnes @ 59.6% Fe
5.3% SiO2, 3.0% Al2O3, 0.089% P and 5.7% LOI
Calcined Fe = 63.2%​

​

Highlights:

The South West Zone iron ore resource remains open at depth to
the east (refer Figure 3). Follow-up RC drilling is planned during
2008 with potential to increase this resource to 10 million tonnes.

Including the South West Zone, the current resource at the
Robertson Range project is 35.6 million tonnes at 58.8% Fe (refer
Figures 1 & 2). A resource upgrade is planned in mid April 2008
with the potential to increase the resource to 45 million tonnes.

FerrAus has identified five (5) targets within the Robertson Range
project (refer Figure 2). The exploration potential of each target is
30 million tonnes. RC drilling is scheduled for mid 2008 and assay
results are expected during Q3 2008.

Overall at the Robertson Range project, exploration of existing
resources and targets has the potential to increase the resource
base to 100 million tonnes grading 57 to 60% Fe during 2008.

Along with the Davidson Creek iron ore project, FerrAus believes it
has a “proven exploration record and is well placed” to grow the
resource base at its East Pilbara iron ore projects to 250 million
tonnes.

 

[grace]

Great news out today. New deposit found only 30km from Jimblebar rail (that's govt owned I believe).

New DSO target over 100million tonne grading 57 to 60%.

New overall target of 250 million tonne. All looks good.

MC = $124 mill

Lots of upside with DSO being valued at about $4 tonne by the market.

Good to see them join the alliance. That has my holdings of BRM and FRS meeting. Now just GIR to go!

http://aspect.comsec.com.au/asxdata/20080423/pdf/00834827.pdf

I hold of course!

 

[Spineli]

Quite the performer in the last week or so! As you say, great find announced today....although I believe they have had the 250m overall target for a while now...they do have quite a bit to go to get to 250m tonnes Fe....

Grace, any news on transportation agreements with BHP on the proposed rail distribution of the good stuff to Port Headland yet?

 

[Spineli]

Junior Explorer Ferraus Limited got a lot of media attention today after Chinese - Western Mining Co agreed to buy a 10% stake in FRS. See the link to the SMH article below.

The placement could be for up to 15.9m shares @ 1.15 a share and is expected to inject fresh capital in the order of $15m+ into the junior explorer.

Apart from seeking 250Mt of iron ore within its current projects in and around the Pilbara region, WA, the most attractive element to its projects is the low Capex, situated very close to Port Headland for streamlined shipping...when that day eventually comes...

The article:
http://business.smh.com.au/ferraus-latest-miner-to-attract-china-interest/20080505-2ayp.html

 

[Spineli]

well well, shares in trading halt again pending another placement only 2 days after the placement to China Western Mining Co..

 

[grace]

well well, shares in trading halt again pending another placement only 2 days after the placement to China Western Mining Co..

Yes, just what is going on? Planning on spending heaps of money soon obviously. Perhaps they need to slip BHP a few bucks to hop on the train

 

[grace]

It is very quiet on this thread for an iron ore junior. Thought I would post a chart. FRS looking very strong at the moment (blue sky).

Target of 250 million tonne grading 58 - 60%Fe (although I seem to add up their targets at each deposit and I get 390 million tonne).

Mining application lodged 2007, and first mining planned for 2009 at 2mtpa. Closest deposit is 35km from rail line.

jorc of 43 million tonne DSO.

SP = $1.43 Cash $20 mill
MC = $218 million fully diluted ($4.65/tonne, but they have other projects!)

Planning to jorc up another 50 million this year, and 100 million next year. So far they have always exceeded their targets.

Here is a recent presentation. Note that they don't just have iron ore...

http://imagesignal.comsec.com.au/asxdata/20080506/pdf/00839495.pdf

 

[grace]

Robertson range upgraded to 45 million tonne @ 58.9% fe today.

Highlights:

The combined resource for the Main Zone and South West Zone at
the Robertson Range project is 45 million tonnes (refer to location
plans.) Exploration potential of these zones is 50-55 million tonnes.
RC drilling of extensions to the resources and mineralisation is
currently underway.

Overall at its Pilbara iron ore projects, FerrAus believes it has a
realistic opportunity to identify iron mineralisation and grow the
resource base to 100 million tonnes grading 57 to 60% Fe during
2008 and ultimately to 250 million tonnes

Need to add Davidson Creek to this of course.

 

[YOUNG_TRADER]

Hmmm $200m mkt cap with 45Mt's@59% Fe = 26.5Mt's Fe

I reckon they've got about $25m cash on them (cash + placement + rights - exploration and development costs)

So EV = $175m = $6.50/t Fe

Interesting alot of W.A. juniour to mid players trade on an EV of around the $6 level


Biggest concern would be logistics, was watching an interview with Andrew Forrest last night and he made it very clear half the battle was transport the other funding.

Any idea's on how this mobs going to transport the ore?

 

[grace]

Hmmm $200m mkt cap with 45Mt's@59% Fe = 26.5Mt's Fe

I reckon they've got about $25m cash on them (cash + placement + rights - exploration and development costs)

So EV = $175m = $6.50/t Fe

Interesting alot of W.A. juniour to mid players trade on an EV of around the $6 level


Biggest concern would be logistics, was watching an interview with Andrew Forrest last night and he made it very clear half the battle was transport the other funding.

Any idea's on how this mobs going to transport the ore?

They hope to get a state rail agreement - see previous investor presentations.

I guess my thoughts on all of the junior iron ore pack (advanced ones anyway) is that they should build another rail line between a bunch of them... They could start at FRS and wind there way up to the port. Just dreaming I guess. Tigerboi might not like this though

Don't forget nickel (JV with BHP near Silver Swan) and manganese deposits when making valuation. I have no idea what they are worth though!

 

[Spineli]

Yeah nice little resource upgrade today (30%) for the Robertson Range Project to take the Main Zone to 40Mt@58.8%Fe + roughly 5Mt@59.6%Fe for the South-West Zone to give 45Mt (inferred + indicated) for Robertson Range thus far.

Robertson Range Iron Ore Project
Have a look at the attachment below which shows the Robertson Range project from today's ann.

Main + SW Zone is now at 45Mt@(58.8%-59.6%)Fe.

The ann goes on to say that (Main + SW Zone) has potential to reach 50-55Mt.

Look at the other targets within the RR project: (Ann on 6th May says these targets have an exploration potential of 80-100Mt...."First results by mid ‘08" - hopefully some ann's soon regarding these target areas)
- T55500E
- T56500E
- T59000E
- T59800E
- T91000N

They all look quite nice on the Gravity survey...time will tell how much Fe is held in those regions...Whats the go with the Greenstone belt on the map?? looks pretty pink to me (it forms part of their tenement)

Davidson Creek Iron Ore Project (Davidson Creek Prospect + Mirrin Mirrin Prospect + Taipan Resource + Gwardar Prospect)

- Taipan - Inferred = 7.4Mt@57.7%Fe (Target 15-20Mt)
- Gwardar - Potential = 25-30Mt

Other targets within the Davidson Creek Project (see second attachment below)...again....if the company is estimating a potential of 25-30Mt for Gwardar....look at these targets....real potential there IMO based on Gravity survey (+size)

- T40500E
- T42500E ("RESULTS EXPECTED IN MAY '08")...nothing yet and 1 week left in May!
- T46500E
- T48500E
- T51500E
- T52000E

GOING FORWARD


"Overall at its Pilbara iron ore projects, FerrAus believes it has a
realistic opportunity to identify iron mineralisation and grow the
resource base to 100 million tonnes grading 57 to 60% Fe during
2008 and ultimately to 250 million tonnes (refer also announcement
released to ASX 24 April 2008)."

+ THEY HAVE MANGANESE AND NICKEL....

----------------------------------------------------------------

Grace, I notice you have been trying to add up their forecasts of Potential Targets...and you count much higher than 250Mt...

Based on what I have above...I get the following:

(Indicated + Inferred) = 45Mt (Main + SW Zone) + 7.4 (Taipan)
(Potential) = +10 (Main + SW Zone) + 100Mt (other RR targets) + 12.6Mt (which is 20-7.4inferred)=(extra Taipan) + upto 30Mt (Gwardar)
+ POTENTIAL FOR TARGETS at Davidson Creek (for which they have provided no guidance / but an overall estimate figure)

TOTAL (Indicated + Stated Potential = 205Mt (*BUT NOTE* - I have not included any of the targets stated above that fall under the Davidson Creek project...note my comments above about placing a 25-30Mt potential on Gwardar and look at the other 6 targets in that area (which if it is assumed FRS hope for a 250Mt deposit....they are being VERY CONSERVATIVE in assigning (250-205) = 45Mt to these 6 good looking deposits at the Davidson Creek Project.

In saying that...IF each of those 6 deposits (results for 1 of those deposits is due to come in May'08 - still havent received news on it)...contains as much as the potential for Gwardar...i.e. 25-30Mt...then you are potentially looking at an additional 180Mt...to the 205Mt calculated above

Grace...I think that gives you 385Mt ..... you calculated 390Mt...

+ i have not included any tonnage for Mirrin Mirrin...


-------------------------------------------------------------------

YT,

-for cash on hand, see the ann on 6th May, cash at June08 is forecast to be $20m + after the ann, include the proceeds from the 1-20 rights issue, i think thats another 15m? in their coffers...so they could have upto $35m cash by next month...
-for rail, projects are roughly 30km from Jimbelar Railway....and then its 1 stop to Port Headland i guess...but these guys are still trying to negotiate an agreement for rail and port access...

 

[Spineli]

Just to clarify re: Potential Fe @ Davidson Creek project ...I made an assumption above in my calculations of what the total Fe reserves would be if each of the 6 targets in Davidson Creek has a 30Mt potential...hence 180Mt

I got the 30Mt estimate for each of those targets from the ann on 1 April...

However, some have prior estimates from 24 April ann (which differ again from some of the estimates on the 23 April ann) - so while they keep changing their estimates...I have for my calculations above (used 30Mt for each of those targets):

- T40500E (no indication is given as to potential Fe)

- T42500E ("RESULTS EXPECTED IN MAY '08")...nothing yet and 1 week left in May! (40-50Mt potential as per 24 april ann)

- T46500E (5-10Mt potential as per 24 april ann)

- T48500E (15-20Mt potential as per 24 april ann)

- T51500E (no estimate given)

- T52000E (10-20Mt potential as per 24 april ann)

Taking the upper limited of these potential estimates and prescribing an estimate of 30Mt for the targets with no estimates (as per guidance in the April 1 ann for Davidson Creek)...

I still get a total (inferred + indicated + potential) resource of
385 + 20 (additional for T42500E) - 20 (T46500E) - 10 (T48500E) - 10 (T52000E)

= 365Mt (not including any potential @ Mirrin Mirrin)

 

[Spineli]

New highs reached today! Up a cool 6% for the day taking the stock to $1.59 (see attached chart)

Some coverage for this stock @ miningnewspremium.net (miningnews.net) yesterday:

FerrAus boosts iron booty by 30%

Thursday, 22 May 2008
Charlotte Dudley

Excerpt which stood out -

"Mulling over the potential of the upgraded booty, FerrAus managing director David Turvey said the shape and size of the deposit would likely support a production rate of “at least” 4 to 5 million tonnes per annum.

The company had previously touted a 2 million tonne production target.
"

Last week in May coming up and hopefully we get some news on - T42500E ("RESULTS EXPECTED IN MAY '08")...(40-50Mt potential as per 24 april ann)