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10 E&MJ; • JANUARY 2016 www.e-mj.com Rio Tinto Approves $1.9B Amrun Bauxite Project REGIONAL NEWS - AUSTRALIA/OCEANIA Rio Tinto has approved development of its $1.9 billion Amrun bauxite project on the west coast of the Cape York peninsu- la in north Queensland, Australia, about 40 km south of the company's existing East Weipa and Andoom mines. Develop- ment will include construction of infra- structure required to support the bauxite mine, including a processing plant and port, a dam, a tailings storage facility, roads, and a ferry terminal on the Hey River to transport workers from the near- by town to the mine. Rio Tinto is targeting an initial bauxite production rate of 22.8 million metric tons per year (mt/y), replacing production from the currently depleting East Weipa mine and increasing Rio Tinto's annual bauxite exports from the Cape York peninsula by around 10 million mt/y. Project design also provides options for future expansion to 50 million mt/y. Production and shipping of bauxite from Amrun are scheduled to begin in the first half of 2019, ramping up to full pro- duction by the end of the year. The major- ity of capital expenditure for the project is scheduled for 2017 and 2018. The pro- ject offers an internal rate of return in excess of 20%, and more than half of its future production is already committed under off-take agreements. Production planning for the mine is supported 80% by proved ore reserves and 20% by probable ore reserves, suffi- cient for the first 10 years of production. Rio Tinto has 1.49 billion mt of bauxite reserves in the Cape York region, plus 1.91 billion mt of resources. Rio Tinto Chief Executive Sam Walsh said, "This long-life, low-cost, expandable asset offers a wide variety of development options and pathways over the coming decades. We are establishing Cape York bauxite as the product of choice for the Chinese seaborne market, with consistent quality, security of supply, and strong tech- nical marketing support. Amrun will be significant in helping to meet growing bauxite demand from China." At peak construction, the Amrun pro- ject is expected to provide work for around 1,100 people. Once operational, Amrun will help support ongoing employ- ment for Rio Tinto's existing Cape York bauxite operations workforce of around 1,400 employees and contractors. Hermes Deposit Will Add to Plutonic Production Northern Star Resources has completed a scoping study of its Hermes gold deposit 60 km southwest of its Plutonic mine in Western Australia. The study suggested that the deposit can contribute 1.1 mil- lion mt of feed to the Plutonic mill at a grade of 2.6 g/mt gold over a two- to three-year period. Contained gold would total 86,000 oz. Capital cost to bring the Hermes deposit into production is estimated at A$10 mil- lion. All-in sustaining cost of production is estimated at A$1,095/oz of gold. Northern Star forecasts that comple- tion of the Hermes project will increase Plutonic production from a current range of 75,000 to 80,000 oz/y to 100,000 oz/y in its 2017 fiscal year and beyond. Mining is scheduled to start at three pits in mid-2016, with the ore being trucked to Plutonic via a direct haulage route. Northern Star acquired the Hermes deposit from Alchemy Resources in March 2015 for A$1.5 million. The deposit remains open in several direc- tions with the potential for pit extensions and underground mining Since taking ownership of the Plutonic mine in early 2014, Northern Star has invested significantly in exploration and development as part of its strategy to move away from remnant mining and into new resource areas. The company com- pleted more than 120,000 m of diamond drilling in its fiscal year to June 30 and has budgeted for an additional 90,000 m during its current fiscal year. Develop- ment of four new areas is now well advanced. Mineral resources currently total 1.7 million oz of gold. Northern Star owns and operates four mines in Western Australia: Jundee, Kanowna Belle, Plutonic and Paulsens. It has a 51% interest in and is operator of the East Kundana joint venture. Its gold production during its current fiscal year is forecast to be in the range of 535,000 to 570,000 oz. Ship being loaded at Rio Tinto Weipa operations with bauxite stockpiles in the background. A new port will be built near Boyd Bay to handle production from the Amrun project. (Photo: Rio Tinto)