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AUSMAG PTY LTD

Magnesium carbonate (MgCO3 or magnesite) is an ore used for production of a wide range of industrial minerals and compounds and magnesium metal as well as its alloys When pure, magnesite contains 47.8% MgO and 52.2% CO2.
One of the main uses of magnesite is to produce various types of magnesia (MgO) and refractory materials used in steel making, production of cement, glass, non-ferrous metals, energy and chemicals, fire retardants, superconductors, batteries, building materials, and in hydrometallurgy. Magnesite is also used to produce magnesium metal which is the lightest of all metals, being about two-thirds lighter than aluminium yet stronger than steel. Magnesium metal is non-toxic, non-magnetic, has high-impact strength and is resistant to denting.

Key markets:

  • Refractories - steel, cement, glass, energy, chemicals
  • Flame retardants
  • Building products - mag wall, MgO board, mag cement, geopolymers
  • Magnesium alloys - cars, airplanes, tanks, armoured personnel carriers, other defence uses
  • Hydrometallurgy - nickel/cobalt production
  • Water purification
  • Magnesium-ion batteries
  • Magnesium-diboride superconductors - MRI scanners, high power electric motors for naval propulsion, electric turbo-fan aerial engines

The dominant player in the magnesite space is China. China is the largest consumer of magnesium oxide and the largest producer. Other key markets are Western Europe, Russia and Eastern Europe. Key growth markets are in India, China and Asia. Economic recovery in USA is likely to spur greater demand for more refractories. Tighter emission standards for cars are likely to lead to greater demand for magnesium alloys. Growth of the commercial and residential construction sectors and increasing adoption of magnesium oxide based building products are likely drivers for increased demand for magnesium carbonate ore.

Magnesium carbonate market is more than 25 times bigger than graphite market and 40 times bigger than lithium carbonate market. Magnesium-ion batteries are likely to lead to accelerated growth in magnesium carbonate demand at the expense of graphite and lithium carbonate demand growth. Magnesium carbonate is a low cost raw material input in a greater number of growing sectors than lithium or graphite. Graphite and lithium will continue to have their uses in some sectors but greater availability and much lower cost of magnesium carbonate will lead to its substitution for other minerals wherever possible. China dominates magnesium carbonate, lithium carbonate and graphite markets.

AusMag is a private company registered and based in Western Australia with one shareholder (Korab) holding 100% of issued shares. AusMag owns 100% of the Winchester deposit and the Mineral Lease ML30587 where it is located.
AusMag is focused on commercialising Winchester magnesium carbonate deposit located near Darwin in the Northern Territory and becoming a leader in magnesium carbonate supply chain.

  • Aggregate EBITDA of AU$395 mln over quarry life
  • Attractive long-run annual EBITDA of AU$31 mln/year (at 800kt/year sales)
  • Low projected operating cost in the lowest quartile of global magnesite projects
  • Mineral resource 16.6 MLN tonnes of magnesium carbonate
  • Quarry life of 14 years based on indicated resource of 12.2 mln tonnes

Magnesite will be crushed and screened to produce saleable product with no additional processing. Operating costs (including crushing and screening) range from AU$21/t for 800KT/y production to AU$29/t for 200KT/y production. Transportation costs to port and port charges add $15/t to the estimated cost of the product. Production can be expanded to 1.6MT/y if the volume of offtakes and sales requires.

Mining lease granted to 2040 and can be extended for another 25 years. Potential to operate long life mine and provide raw material for refractories production for several decades.

Capital expenditure is around AU$4 mln which is exceptionally low for the aggregate project EBITDA of AU$395 Mln and long run annual earnings of ~AU$31 Mln.

This is due to very simple quarry operation involving no processing other than crushing and screening. The terrain is flat requiring very little work. Sealed road with high voltage power passes few hundred meters from the deposit. The railway line is 8km from the quarry. Batchelor town with motels, shops and all amenities is 2km from the deposit.

Mine can be developed in stages and easily expanded. No need for additional funding once mine is in operation, capacity expansion can be fully funded from cashflow. Mine can operate at a profit with magnesium carbonate prices as low as US$40/t. Mine can produce various grades of magnesium carbonate rock depending on customer requirements (from 42% MgO to 46.5% MgO). Drilling has confirmed mineralisation grading around 46% MgO both inside and outside of the current resource and current pit design. Magnesite mineralisation continues for approximately 8 Km in length. Current JORC mineral resource covers approximately 7% of this mineralised trend.

 
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