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Royal's Razorback.

Robin Bromby - The Australian - 12/4/10

BACK in January we ran through the list of companies having potential iron ore deposits close to existing railway lines, no small thing in the event that these prove to be economic propositions.

One was Royal Resources (ROY) with its Razorback project, east of Peterborough in South Australia. Razorback is 40km from the interstate rail from Broken Hill and then another 170km from the wharf at Port Pirie.

Well, we are now closer to knowing something about this project, with drilling having just begun. It has been a while coming: it was back in the 1960s that South Australian government geologists identified outcropping magnetite mineralisation over a strike length of 4.5km, with a potential extension a further 10km.

Last November, the Singapore arm of two big Chinese steel-makers entered a joint venture with Royal, earning 50 per cent by spending $50 million and then sole-funding work once an inferred 250 million tonne resource is achieved.

Earlier this year, two analysts at Patersons brokerage noted that Royal "has the potential to unlock a substantial low-strip magnetite resource at Razorback Ridge with access to under-utilised infrastructure in a resource-friendly jurisdiction". Clearly, one to watch, especially with an MD, Marcus Flis, who has a long track record in the iron ore business.