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Iron Ore for Dummies

Contents
CONTENTS...............................................................................................................................i 1 2 3 4 5 6 7 8 9 11 HISTORY..........................................................................................................................1 GEOLOGY.........................................................................................................................2 STRUCTURE....................................................................................................................4 MINERALOGY.................................................................................................................4 TYPES OF ORE................................................................................................................5 ORE GENESIS .................................................................................................................6 METALLURGICAL PARAMETERS .............................................................................8 IRON ORE TO STEEL.....................................................................................................9 WONMUNNA PROJECT .............................................................................................10 WHY WONMUNNA IS ATTRACTIVE.......................................................................14

10 HOW WONMUNNA COMPARES ..............................................................................14

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HISTORY

The Iron Age:

Classically the Iron Age begins around 1200 BC, however, the oldest iron artefacts ever found are from 4000 BC in modern Egypt. These ancient tools and ornaments were fashioned from meteorites! Since meteorites are metallic iron and nickel, they effectively became the first stainless steel tools in the world. The Iron Age is designated by the beginning of purposeful iron smelting first occurring in Anatolia (Modern Turkey) around 2000 BC. It is also believed that iron smelting was independently developed along the Ganges River of Modern India around 1800BC and in the Termit Massif of Modern Niger in 1500 BC. By 200 BC iron smelting was common around the Mediterranean, Europe, Asia and Africa. The first elementary Blast Furnace (producing pig iron) was developed in China by 500 BC. This is almost 2000 years before the rest of the world! By 300 BC carbon steel was being produced in southern India and Sri Lanka (by what we today call the crucible method, developed in the 1700s). Large scale inexpensive industrial manufacturing of steel

from pig iron became possible with the development of the Bessemer Process in Sheffield England in 1855. This process drastically increased the ease in which impurities, especially carbon, could be removed.

The Iron Age Comes to Australia:

The first serious attempt to establish an iron industry in Australia appears to have been the Fitzroy Works near Mittagong NSW between 1848 and 1855. Although technically successful the project failed due to economic reasons. It was not until 1915 that a successful large scale iron works was established at

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Newcastle NSW, by the BHP Company Ltd. Coking coal was obtained near Newcastle, but the iron ore was shipped from Iron Knob in South Australia.

2 GEOLOGY
Banded Iron Formations:
Banded Iron Formations (BIFs) are chemically precipitated sedimentary rocks that consist of alternating silica rich chert bands and iron rich iron oxide bands (magnetite / hematite). These alternating laminations are caused by chemical, biological or seasonal variations during the time of deposition. These formations require additional geological processes to upgrade the material to ore grade. There are two styles of Banded Iron Formations: Algoma Style BIFs are related to submarine volcanism. They are generally meters to tens of meters thick and have limited extents. They occur primarily in the Archean (really, really long time ago) and are typified in WA by the Midwest deposits (Koolyanobbing, Jack Hills, Mt Gould, Mt Magnet) and the NE Pilbara deposits (Mt Goldsworthy, Yarrie,

And Finally to Western Australia:

Ironically one of the worlds premier iron ore provinces was last to be discovered! The Iron Age was introduced to Western Australia in 1948 through the development of a stateowned plant at Wundowie. Iron ore, initially sourced locally, was then trained in from Koolyanobbing. As no suitable coking coal existed nearby, the plant created charcoal from the nearby hardwood forests. The Wundowie plant provided all pig iron needed for Western Australia and began exporting in the mid 1950s. In 1951 BHP began shipping iron ore to other Australian States from Cockatoo Island in the Kimberley.

By 1960 the export ban on iron ore had been repealed due to the discovery of large deposits in the Hamersley Basin. By 1966 Australia became a major exporter of iron ore as Koolanooka (near Morawa), Mount Goldsworthy and Mt Tom Price began production. During 2007-08 Western Australia produced 291 Million tons of iron ore for a value of over $20 Billion comprising 18% of the worlds iron ore production.

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Nimmingarra, Shays Gap, Pardoo, Abydos, etc). As a result of their genesis they are also generally associated with massive sulphide deposits and host a number of major gold deposits in Western Australias Yilgarn Block; and Superior Style BIFs are deposited in marine waters as a result of the oxidation of the earths atmosphere and hydrosphere. As a result, they are laterally and vertically extensive covering thousands of square kilometres and hundreds of meters thick. They occur at the Archean-Proterozoic boundary (really long time ago), and are typified in WA as the Hamersley Basin deposits across the Pilbara (Mt Whaleback, Mt Tom Price, Mining Area C, Hope Downs, etc).

typified by Yandi, Yandicoogina, Robe River and Pannawonica deposits.

Detrital Iron Deposits

Detrital Iron Deposits (DIDs) form from the erosion of enriched BIFs. They form down slope from outcropping BIFs as chunks of BIF break off and fall down hill. They generally form small scale, secondary deposits.

Channel Iron Deposits

Channel Iron Deposits (CIDs) are pisolitic hematite-goethite ores that filled old river channels a mere 14 million years ago (quite recent). They occur primarily in the Pilbara and are only known to exist in one other locality globally (Kazakhstan). They formed over the BIFs of the Hamersley Basin and either formed round balls (pisolites) by the break down of laterite or by snowballing as they rolled through ferruginous dust down to the old river channels. This formation is

Other Iron Formations

An iron formation is any rock that contains more than 15% Iron. Other iron formations that constitute ore elsewhere in the world include magnetite skarns, bog iron, iron carbonate, gossans, laterite, direct precipitation & unenriched BIFs. In WA these are either non-existent or play minor roles, although unenriched magnetite BIFs are gaining momentum in WA due largely to substantial Chinese investment. These WA deposits, however, are costly due to the fine grained nature of the magnetite which necessitates a significant investment in the grinding process before magnetic separation. This is why many promoted magnetite deposits are not being developed, but at the time they looked good to investors!

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3 STRUCTURE
Banded Iron Formations
In Geology 101 all young rock-lickers learn Stenos Principles, one of which is; the principle of original horizontality. This principle states that layers of sediments are originally deposited horizontally (I realise this is as amazing as describing gravity, but bear with me). This informs us that all sedimentary rocks (which BIFs and CIDs etc fall under) were originally flat, like a piece of paper or handkerchief. Over time really old rocks, like BIFs, experience heat and stress through the processes of deformation and metamorphism during orogeny events (orogeny being Greek for mountain generating). As a result, these flat bodies take on any number shapes (envisage simply pushing two ends of a piece of paper together, it forms a series of peaks and troughs, these are anticlines and synclines respectively).

Occasionally these keels are cut by faults resulting in either shifting the bodies vertically or horizontally from each other.

Channel Iron Deposits As channel iron deposits are recent, they have
not experienced any deformation. And since they infill old river valleys, they are shaped like a river channel; long, narrow, rounded on bottom, flat on top.

4 MINERALOGY
The minerals that make up iron formations are relatively simple and straight forward Ore Minerals Magnetite Hematite Goethite Compostion Fe3O4 Fe2O3 FeO(OH) Iron (%) 72% 70% 62%

In regards to the Hamersley Basin the structure is defined by a number of deformation events from when the Yilgarn Craton and Pilbara Craton collided (in an orogeny). These orogenic events produced refolded folds and structures in the south (where deformation was most intense) that resembles an egg carton. These are called doubly plunging anticlines and synclines, each resembling keels of boats. In the north (far away from the collision) the BIFs are nearly flat lying.

Other minerals you may come across include martite and limonite. Martite is hematite that has taken the appearance of magnetite in crystal structure or shape. Limonite was a considered a mineral until the 1960s at which time mineralogists realized that it was primarily goethite. Limonite is still used as a catch all phrase for hydrous iron oxides. There are typically many other iron-minerals present in an iron ore deposit, however they are not as important as they will form much less than 10% of the total deposit, and essentially are considered gangue (waste) minerals.

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It should be noted that while goethite is an ore mineral it is also known to be a significant source of deleterious elements (Al, Si and P) due to its nature as a hydrous mineral (like an amoeba that captures loose Al, Si and P during growth). It also is the culprit for the LOI (Loss On Ignition), which is why goethite deposits are inferior to microplatey hematite deposits).

preserved, but have experienced more volume loss through the removal or conversion of goethite to hematite.

5 TYPES OF ORE
Martite Goethite (M-G)
The major ore type of the Hamersley Basin, generally accepted as being formed by supergene processes (note that Supergene is the antithesis of Hypogene. While hypogene means enriched by water from below, ie; hydrothermal waters, supergene means enriched by waters from above, like rain water and ground water).

Leached BIF
Residual concentrates of iron oxides in areas of high rainfall. These ores are derived from BIF by direct dissolution of the gangue materials by ground water to give residual iron oxides. The ore ranges from high grade residues of partially oxidized magnetite to highly siliceous but friable BIF, readily upgraded by magnetic or density methods. Not believed to occur in the Hamersley Basin.

These goethite rich ores range from firmly indurated (hard) material to leached ore with very friable (soft) yellow ochre, all with martite and often primary hematite. Phosphorous levels depend on the apatite content of the parent BIF and the post enrichment leaching of goethite, which is a major P carrier. These ores are typically related to present erosion surfaces and contain abundant hydrous iron oxides.

Weathering
Weathering affects all ore types in various ways. These affects are often mistaken for supergene enrichment as opposed to superficial alteration. This weathering process forms three zones from the surface: An outcropping zone with preserved BIF texture and dehydrated goethite producing hematite; A highly modified hydrated zone with no preserved textures and aluminous goethite; and

Microplatey Hematite (mpl H)

These are the premium high grade hematite ores of the world. Like the M-G ores, coarse macrobanding and microbanding are well

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The ore proper which may be affected by moderate levels of post-enrichment processes including the leaching of goethite.

oxidize the magnetite to martite; Supergene Model - in this model gangue minerals are removed from the BIF or converted to goethite by meteoric weathering and flowing ground water. This accounts for 90% of the BIF deposits in the Hamersley Basin; Supergene Metamorphic Model - this model contains the supergene model in as much that meteoric waters oxidize the magnetite, creating martite, and gangue minerals are removed or converted to goethite. The ores then undergo metamorphism (heat and pressure) creating hematite with some residual goethite. These ores then undergo varying degrees of supergene enrichment that strips the goethite creating the low P, microplatey hematite deposits; and Syngenetic Models - in this model, the high grade iron ores were deposited as they are by gravity flows, much like a placer deposit. So that certain areas originally created chert free BIF and the rest created cherty BIF. This assumes a clastic nature to the deposition of BIF, as apposed to chemical, or a clastic remobilization of the chemical BIF. It appears that the main disagreements are with the formation of the high grade, low P, microplatey hematite ores such as those found at Tom Price and Whaleback. A supergene role is fairly accepted as the genesis model for martite goethite deposits (MAC, West Angeles, Hope Downs), although with some disagreement on timing.

6 ORE GENESIS
There are many many different theories out there for the genesis of High Grade BIF Iron Ore Deposits being published from the 1960s through to today, and there is still a distinct lack of consensus on many key elements important to the process. However, the main genotypes are: Hypogene Model - used most convincingly (simplistically) and primarily for the iron ores of the Yilgarn block such as Koolyanobbing and the NE Pilbara such as Goldsworthy. These ores result from hot hydrothermal fluids rising through the BIFs stripping away gangue minerals and leaving behind coarse grained hematite; Supergene Hypogene Model - used in describing the iron ores of the Yilgran block and NE Pilbara, but instead of hydrothermal fluids simply stripping away and upgrading the deposits, the gangue materials are stripped away by an old supergene process and then further upgraded by hydrothermal fluids; Hypogene Supergene Model - in this model, proposed for microplatey hematite deposits, hot hydrothermal fluids strip silica from the BIF and introduce siderite and apatite. Then meteoric (surface) waters strip the apatite out and oxidize the siderite to microplatey hematite and

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7 METALLURGICAL PARAMETERS
Once an iron enriched body has been found there are some key characteristics about the mineralization that will affect the price received for the mined product. Unlike gold and base metals, there is no set market price for iron ore. The value of the ore ultimately depend on what the end user plans to use it for. As such it is the individual contracts and not the market that determines how much a mine will receive for its ore. As steel mills consume 95% of iron ore, it is pertinent to address what they are generally interested in.

Alumina - Alumina doesnt affect the quality of the iron as much as it increases the viscosity of the slag making it thicker. This will slow the descent of charge and prolong the iron making process. Additionally, it makes it harder to remove the slag from the furnace. A steel maker would either have to blend the ore to dilute the alumina or increase the lime flux to decrease the viscosity. Generally, there is a $0.50/t penalty on all ores for every 1% by which the alumina content exceeds 1.5%; Phosphorous - unlike the previous two elements, Phosphorous does not affect the slag as it is not removed by slag. It instead stays within the iron melt and in excessive quantities makes the resulting steel brittle and worthless. Since it can not be removed, ores must have low P concentrations or be blended with low P ores. If there was a way to remove phosphorous from iron ore, the minable resources of the Hamersley Basin would treble. The CSIRO has been working on this problem with little success. Generally, there is a $0.20/t penalty on all ores for every 0.01% by which the phosphorous level exceeds 0.05%; Sulphur - Sulphur makes iron brittle and worthless when hot and prevents welding. However, modern steel makers use manganese to eliminate this problem. Additionally the sulphur can be eliminated by calcining; and Loss on Ignition (LOI) - LOI is a measure of the water contained in goethite. Why not a deleterious element in and of itself, it means that the ore will be of lower grade and that more material will need to be shipped. In the case of fines, the water will be driven off during the

Deleterious Elements
Deleterious elements affect the chemical and physical properties of the molten material in the blast furnace. As a result, additional time and resources are required by steel makers to remove or dilute the contaminants to workable concentrations, affecting the price received for delivered ore. Most Australian ore is blended with cleaner Brazilian ore due to the high concentrations of these elements in Australian ore. The main deleterious elements are: Silica - during the making of pig iron in the blast furnace, silica is fluxed or removed from the iron melt by limestone. This resulting slag must be removed from the blast furnace and if it occurs in high concentrations, more flux and coke must be used to remove it (more slag to deal with) or other ores or scrap metal low in silica must be blended with the high silica ores (more expensive material). Generally, there is $0.10/t penalty on lump and $0.40/t on fines for every 1% by which the silica content exceeds 1.5%;

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sintering process thus increasing the iron grade of the product. (This is what BC Iron is flogging).

blast furnace (for sinter product and lump).

Basic Oxygen Steelmaking

The basic ingredients required are Iron Ore Lump (Iron ore between the size of 6mm and 30mm), Iron Ore Fines (Iron ore smaller than 6mm, used as sinter feed), Coking Coal (Coal that has been reduced to pure Carbon), Limestone (calcium carbonate rock) and Air (Oxygen). The steelmaking process is as follows: 1. Iron ore lumps and sintered fines mixed with coke and limestone in a blast furnace. The coke removes the oxygen from the iron, producing CO2 and iron. The lime removes the silica and alumina creating a slag that floats on the molten iron.

Lump:Fine Ratios

The lump:fines ratio refers to the size of the ore after blasting, mining, and crushing. Product between 6mm and 30mm is considered lump and smaller than 6mm is considered fines. A premium is paid for lump as it can be fed directly into the blast furnace. If fines were fed into a blast furnace then they would smother the air flow. As a result, fines are sintered and agglomerated to produce a pellet or briquette thus increasing the costs. Only Australia, South Africa and Brazil produce a lump product. China, CIS and America only produce fines.

2. The molten iron is poured into a large refractory lined container called a ladle.

8 IRON ORE TO STEEL

Iron ore products are primarily iron oxides, be it magnetite, hematite or goethite. Thus to create iron for use in steel oxygen and other impurities must be removed from the iron ore. This is done in the sinter (for fines) and

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3. The material is then poured into a furnace with scrap metal and lime. 4. Pure oxygen is blown into the furnance to increase the temperature, remove carbon and other unwanted elements. 5. The molten material is poured into a ladle and alloying elements are added. 6. The molten material is then poured into its shapes and the slag removed.

9 WONMUNNA PROJECT
Following is a break down of the Wonmunna Iron Deposits along the lines of the previously discussed parameters.

History
The Wonmunna tenement was originally pegged by Steve Elliot in 2005, along with Tom Price and Anticline, to test for Besshi Style base metal (copper/zinc/silver) mineralisation in the Jeerinah Formation of the Hamersley Basin. As these tenements had no mapped Iron formations, they were not held by the Big Boys allowing Steve to obtain a significant holding in the Land of Giants. While FMG obtained the iron ore rights to Tom Price and Anticline, private company Poondanoo took the iron rights to Wonmunna to test the CID potential. After testing the potential and realizing the low grade of the CID, Poondanoo backed out reverting the iron rights back to Talisman. Although one of the CID drill-lines happened to intersect high grade Marra Mamba Formation beneath the CID cover, iron prices were low and Poondanoo was not interested at the time. After the market didnt react to the Boundary Gold Resource at Trillbar and the base metal drilling was not delivering much excitement, Talisman decided to declare it was going to pursue the iron at Wonmunna. As the iron price had recently jumped to historic levels and iron stocks were all the rage, the market responded in such a way as to encourage Talisman to become an Iron Ore Junior. Approximately one year, $5 Million dollars, and 35,000 RC meters later Talisman Mining had an 80 Million ton Iron Ore Resource at the Wonmunna Project in the heart of the Hamersley Basin.

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Geology
The Iron deposits at Wonmunna are hosted by the Marra Mamba Iron Formation. This formation is the oldest BIF in the Hamersley Basin and has been exploited in the Pilbara since the 1970s. Modern Marra Mamba Iron Deposits are mined at BHPs Mining Area C, Rio Tintos West Angeles and Hope Downs, and FMGs Cloudbreak and Christmas Creek. Minor Marra Mamba deposits are also mined at Mt Whaleback and Tom Price. This formation is broken up into three smaller BIF units called the Nammuldi Member, the McLeod Member and the Mt Newman Member. The Mt Newman member has historically been the most economic, but recent Nammuldi Deposits discovered by FMG and Hancock Prospecting are showing great potential. Wonmunna is believed to contain all three members with mineralisation hosted within the Nammuldi and the Mt Newman members.

Structure
The shape of the Wonmunna Iron Deposits is that of a boat keel with the majority of mineralisation located in the center of the boat.

Mineralogy
The Wonmunna Iron ore deposits are dominated by goethitemartitehematite minerals. More detailed work into the identification and quantification of the ore minerals is being completed by an Honours student through the University of Wollongong.

Ore Type
The generalized ore type of the Wonmunna deposits is MartiteGoethite. The mineralisation can be broken up roughly into

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MT NMM Resource NMM DSO Resource CMM Resource CMM DSO Resource SMM Resource SMM DSO Resource Total Resources Total DSO Resources 47.2 6.2 15.2 2.4 15.9 1.4 78.3 10

L:F 60:40 60:40 65:35 75:25 75:25 75:25 65:35 65:35

Fe % 55.9 61.4 56.8 61.2 55.3 61.2 56 61.3

SiO2 % 6.9 3 5.7 3.3 6.7 2.9 6.6 3.1

Al2O3 % 3.7 1.8 3.3 1.7 3.8 1.6 3.6 1.7

P% 0.07 0.07 0.1 0.1 0.07 0.06 0.08 0.08

LOI % 8.9 7.2 9.5 7.4 9.7 7.6 9.2 7.3

three layers, and Upper Low Grade Ore Zone, a Middle High Grade Ore Zone and a Lower Low Grade Ore Zone. The upper and lower ore zones are dominated by goethite while the middle ore zone host significant martite and/or hematite mineralisation. More detailed work into the identification and quantification of the ore minerals is being completed by an Honours student through the University of Wollongong.

important here to point out that the three deposits (NMM, SMM, and CMM) appear, superficially, to differ in their genesis as reflected in minor chemical, physical and spatial variations. This too will be addressed through the detailed work being completed by the University of Wollongong Honours Student.

Metallurgical Parameters
The effect of the deleterious element concentrations within the Wonmunna Resource is outlined in the following table, expressed as a potential cost impact on ore price. Alumina Penalty $ 1.10 0.15 0.90 0.10 1.15 0.05 1.05 0.10 Phosphorous Penalty $ 0.40 0.40 1.00 1.00 0.40 0.20 0.60 0.60 Total DE Penalty $ 2.85 0.925 2.95 1.55 2.85 0.60 2.925 1.10
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Ore Genesis
The Wonmunna Iron Deposits are believed to be the result of supergene enrichment that has been over printed by weathering. It is Silica Penalty $ NMM Resource NMM DSO Resource CMM Resource CMM DSO Resource SMM Resource SMM DSO Resource Total Resources Total DSO Resources 1.35 0.375 1.05 0.45 1.3 0.35 1.275 0.40

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Infrastructure Considerations
Wonmunna is located 80 kilometres from Newman along the Great Northern Highway. This prime location places Wonmunna within

25 kilometres of Rio Tintos Hope Downs and West Angelas Mines and BHPs Mining Area C.

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10 HOW WONMUNNA COMPARES

On the following pages you will find a series of graphs comparing Wonmunna to: Producing Mines Other Marra Mines) Mamba Deposits (and

11 WHY WONMUNNA ATTRACTIVE

IS

1. Each Deposit contains a High Grade Core that legitimately satisfies DSO requirements. 2. Premium Lump:Fines Ratio that is uncharacteristic of Marra Mamba Ore Bodies. 3. Close to Infrastructure (Great Northern Highway, Multiple Rail Lines) and Existing Operations (Mining Area C, Hope Downs, West Angelas). 4. Potentially Low Mining Costs due to the low abrasiveness, hardness and competency of the ore. This means mining could consist of free digging instead of blasting with low wear and tear on equipment. 5. Low Strip Ratio as the ore is flat-lying and close to the surface. 6. Geometrically Simple and therefore easy for orebody modeling and pit design. 7. Remaining Exploration Potential both within the orebodies and elsewhere within the Project. 8. 100% Owned by Talisman Mining

Other Iron Ore Juniors Deposits

The comparison parameters used in the graphs include: Tonnage Iron Silica Alumina Phosphorous DE Penalties Ore Value

The first five are fairly straight forward. The DE Penalty is calculated based on the previously outlined deductions for excessive alumina, silica and phosphorous (section 7). It is important to note that these values are referenced from deductions for Brazilian Ore and are themselves generalisations. Actual values may and probably will vary. There is also a spread sheet in the Appendix that contains all the raw data for the 75 deposits included in this comparison. You may observe that some of the deposits/mines have a label, indicating that the numbers are for their Reserves as opposed to their Resources. By their nature, these will be smaller and usually of higher quality, so do not be alarmed when you see that Whaleback has less than 400 Mt left! As most of this data (especially for the Big Boys) is not readily available, I had to work with what I could get my hands on.

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