2 Dec 2014

Rex Minerals’ AGM, Melbourne, November 2014

by YPLandowners | posted in: News | 0

YPLOG attendance at Rex Minerals’ AGM, Melbourne, November 2014

On Friday 21 November 2014, five members of YPLOG attended Rex Minerals’ Annual General Meeting for shareholders in Melbourne. We had hoped this meeting would provide some details about the proposed smaller start-up option Rex announced some four months ago.

The meeting lasted for less than three quarters of an hour, with the Chairman’s Address (see attached) taking up much of the time.

In that address, the Chairman highlighted the difficulty in locking down finances due to a drop in commodity markets (including iron ore) and the volatility of the Australian dollar. This prompted Rex’s decision to opt for a lower-capital start-up project at Hillside.

None of this was new information. Nor were any details provided on what the smaller start-up would entail or when those details would be publicly released. The Chairman stated: “We have not yet reached a point where we can report definitive outcomes”. All that Rex was able to promise was an update in the New Year.

As a result, shareholders and the local community are still left wondering and waiting. For many, including those farmers whose land is required for the full Hillside operation, this means more months of uncertainty and stress.

Questions Rex and the Government need to answer

In light of the total absence of any information on the new start-up operation, YPLOG has started to compile questions we believe Rex and the Government need to answer as a matter of urgency.

These include the following:

New MLP

The Mining Lease Tenement document states Rex must now complete and gain approval for the Program of Environment Protection and Rehabilitation (PEPR) before any work can start at Hillside. This PEPR will only be approved if it is consistent with the MLP. Since the smaller start-up option is likely to involve changes to the original MLP (eg no pipeline to and no shipping from Ardrossan, road transport of ore concentrate to Adelaide, stock piling of iron ore at Hillside) when will the government require Rex to submit a new MLP?

Access to Land

The Mining Lease Tenement document also states the proposed PEPR will only be approved if “Access has been authorized to all land relevant for the operations described in the PEPR”. Does this mean Rex still needs to acquire all the land needed for the full scale operation before any work can begin at Hillside, even for the smaller start up phase, including

o Purchase of four farms and lease of a fifth farm within the Mining Lease?

o Lease of the land corridor needed for the Ardrossan pipeline?

Port facilities

Rex have been granted a 12 month deferral of the assessment of the Port Miscellaneous Purposes Licence application on the grounds it is evaluating alternative options for what has been proposed in the Port MPL (State Government’s Assessment Report, 2014; 15). Do these alternatives involve scrapping the slurry/seawater intake pipelines and port upgrade in favour of trucking the ore to Port Adelaide?

Uranium

In its MLP (5.8.2.1) Rex stated it would manage the pockets of high uranium concentrations at Hillside by ‘blending’ (ie mixing) material with elevated uranium concentrations with ore of lower uranium grades. This, Rex argued, would ensure that ore delivered to the milling circuit and the waste rock dumps met the statutory limits set by the EPA. However, Rex’s original calculations were based on the full-scale operation. Will such ‘blending’ still be feasible under the smaller start-up plans? What new modelling will be required to prove this? If blending is no longer an option, what (if any) are the alternatives?

Sea Water intake

Rex stated in their Response to Government document that sea water is ‘considered the only economically viable source of raw water’ at Hillside and will be used in the processing plant. If the Ardrossan Port proposal is on hold, how does REX intend to acquire the sea water for Hillside during the smaller start-up phase?

Stock-piling of iron ore at Hillside

In his AGM Address, Rex’s Chairman stated the company is reviewing a range of ‘copper/gold only’ start-up options. Does this mean iron ore will be stock-piled at Hillside? If so, how big will this ‘new’ stock pile be, how long will it remain and what are the environmental risks?

Road realignments

In approving Rex’s applications for the realignment of St Vincent’s Highway and the Pine Point diversion, the Development Assessment Commission noted “All roadworks shall be completed prior to the commencement of on-site work, including mining operations”. How will the proposed smaller start up phase accommodate this requirement?

SA Water pipeline

Will the pipeline from Port Wakefield to Ardrossan and Hillside still be built as part of the smaller start-up phase?
Has a final agreement with SA Water been reached re this pipeline extension? If so, what are the terms of this agreement?
What is Hillside’s maximum water allocation per year from the SA Water pipeline?

What will the smaller start-up mean for the much lauded economic benefits of Hillside? For example:

Jobs: Rex has consistently claimed that Hillside will create jobs for the local community, claiming 600 – 700 jobs during operation. With a smaller start-up phase, how many fewer jobs will now be available, especially given Rex’s proposal to investigate contract mining as part of its changed start-up phase?

State Government royalties: Under the full scale operation, Rex claimed the State Government would receive approx. $30 million per annum averaged over the life of the mine. How much less will now be paid?

Bankable Feasibility Study

In March 2014, Rex raised approx. A$12.6m by way of a 2-tranche placement of almost 32 m shares. In part, the extra funding was to allow the company to “to expedite our business plans including completion of the BFS [Bankable Feasibility Study]”… Rex has still not completed the BFS. When will it be available?