BRM 0.00% $2.53 brockman resources limited

smh not as good as the big bald figure suggest

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    Digging around in the Pilbara dirt

    March 6, 2008

    The iron ore resource unveiled by Brockman is not as good as the big bald figure suggests.

    WHEN it comes to iron ore resources, sometimes it pays to read the fine print.

    Brockman Resources shares nearly tripled yesterday after it revealed a 1.1 billion tonne Pilbara hematite resource, closing $1.87 higher at $3.

    But all is not necessarily what it seems.

    The headline number made it look like the greatest thing since Fortescue Metals, but in terms of direct-shipping ore it contained only 56.2 million tonnes at an average grade of 57.5 per cent.

    Of the remaining 1 billion tonnes, Brockman said only 499 million tonnes would actually be recoverable through beneficiation.

    The beneficiation feed is at a grade of just 44.2 per cent iron - the type of resource BHP Billiton, Rio Tinto and Fortescue would have in abundance but never bothered to mention.

    The feed is extremely high in silica. The beneficiation feed contains an average of 25 per cent silica. As an example, Fortescue's Cloud Break and Christmas Creek deposits contain just 5.5 per cent silica.

    Brockman says it will take simple gravity separation - and no expensive crushing or grinding - to get the silica down to acceptable levels, since it mostly occurs in gravel-like rocks which are mixed in with the iron ore.

    But there is still an issue of transport.

    Brockman said it hoped to initially ship 2 million tonnes a year, and later ramp up to 10 million tonnes annually.

    Plans to secure third-party railway access from BHP appear awfully optimistic, and it hasn't yet started talking to Fortescue.
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