TORONTO (miningweekly.com) – TSX-V- and Frankfurt-listed Mindoro Resources this week reported that it had completed the first shipment of high-iron/low-nickel direct shipping ore (DSO) from the Agata project, located in northern Mindanao, in the Philippines.

The shipment of 54 181 wet metric tonnes (wmt) of limonite ore, containing 0.70% nickel and 49% iron, left the port of Payong-Payong, in Agusan del Norte, on Sunday.

Under terms of the offtake arrangement between subsidiary Agata Mining Ventures (AMVI) and Tewoo Hoperay (Singapore), AMVI expected to receive gross revenue of $890 000 for the shipment.

Upon final exercising of a 25% option in the Agata project, Mindoro would hold a 40% direct interest in AMVI, a joint venture (JV) company in which TVI Resource Development (TVIRD) also holds a 60% interest.

"We congratulate operator TVIRD on [its] efficiency in loading our first DSO shipment in just seven days. Mindoro's transition towards becoming a cash-flow generating company, through its interest in AMVI, hails a major milestone in Mindoro's strategy to rebuild value for its shareholders,” Mindoro CEO Penny Gould said.

Agata output remained steady and the operation had a remaining inventory of about 26 669 wmt of limonite ore with nickel and iron content levels between 0.7% and 0.9% and 48% and 49%, respectively. The operation was expected to ship about 55 000 wmt of DSO about every three to four weeks, with shipping rates expected to accelerate rapidly to 2.5-million wmt a year in 2015.

Mindoro also on Thursday announced that Gould had resigned as director of the company to make way for Geocel Olanday, who had been appointed to the board.

AGATA PROJECT

The Agata project is located in Agusan del Norte province, within the Surigao mining region on the island of Mindanao. Surigao is a major nickel-producing region, providing ore to processing plants in Australia, China, Korea and Japan. The region has hosted between 13 and 15 DSO operations since 2011 and exported 27-million wmt in 2013.

An initial offtake agreement to sell one-million wmt of DSO was signed in June between AMVI and Tewoo Hoperay, a subsidiary of Tianjin Hoperay Mineral, a major Chinese State-owned enterprise.

A second agreement to sell 500 000 wmt was inked in August.

The JV received advance payments of $2-million against the initial agreement to fund start-up operating costs and a further $1-million advance was expected in connection with the second agreement.

On September 10, Mindoro and TVI released a National Instrument (NI) 43-101-compliant feasibility study that indicated robust economics for a DSO operation of the high-iron laterite resources at the Agata project. The study concluded that the project had low initial start-up capital requirements of only $10.1-million, a high internal rate of return of 187% and expected payback within the first year of operation.

It also calculated a post-tax net present value (at 10% discount) of $37.9-million and DSO product grading 48% iron and 0.9% nickel, a product the company said was in consistent demand.

An April, 2013 NI 43-101 resource estimate reported proven and probable reserves of 9.7-million wmt.

Mindoro noted that DSO prices were subject to seasonal fluctuations influenced by weather patterns. During the monsoon season, from about November to February, the rough ocean off the east coast of the Mindanao peninsula prohibited shipping. DSO projects on the west coast, where Agata was located, were, however, more sheltered and could ship ore 12 months a year and take advantage of potential seasonal price spikes.