Ann: NRW Operational Update, page-43

I have often harped on my view that it is low-phosphorous Marra Mambo ore that is critical to RIO being able to meet the specifications required for RIO's Pilbara Blend. Rightly or wrongly, I understood (note the past tense) that RIO is not short of Brockman ore, but its high phosphorous content requires it to be blended with Marra Mambo ore to get the required Pilbara Blend, and hence opening a mine in the Marra Mambo ore body would be a no-brainer, provided that unrelated-to-phosphorous characteristics were favourable. When the development of Silvergrass mine was mooted, and later developed, the foregoing made sense.

What I do not know is the ratio of the blend. Does a little Marra Mambo ore allow a significantly greater tonnage of Brockman ore to be mined? Also, was Silvergrass ore needed to be blended with established mines of Brockman ore, or was it developed to allow a new Brockman-ore mining initiative? I am now inclined to think that the latter notion may be valid – that is, conceptually, Silvergrass and Koodaiederi may be linked in a holistic pair of initiatives to be executed in tandem. In simple terms, if RIO could produce X tonnes of low-phosphorous ore, then it could with little risk produce some multiple of that of higher-then-desirable-phosphorous-content ore. This idea of tandem initiatives suggests the mining-services supplier who got the Silvergrass work is in the box seat to get the Koodaiederi work.

On the matter of the two initiatives often mentioned together, the FY2017 Annual Report has in respect to Silvergrass and Koodaederi, the following sets of words:

• In terms of our growth projects, we completed construction of the Silvergrass mine in the Pilbara and now have studies under way for the Koodaideri project for early next decade to replenish and maintain the quality of our Pilbara iron ore blend.

• Since 2012, the product group has followed a disciplined, value-accretive, low-cost brownfield approach to expansion. The addition of Silvergrass, comprising the installation of a satellite crusher and an overland conveyer, added an extra 10 million tonnes of capacity. The Koodaideri project is being studied as the next major replacement mine and is a low-cost option that would help underpin the Pilbara Blend product. An investment of US$30.9 million was approved in May to complete the feasibility study.

In summary, I suspect that the Announcement we NWH shareholders are hoping for will be made this financial year, if not this calendar year. It will be big, but not too big.