Czr Resources Ltd [ASX:CZR] is up 28.5% today with shares trading at $1.8 cents at the time of writing.
Czr Resources (previously known as Coziron Resources), is a mineral explorer with gold and iron ore projects in Western Australia.
They focus on projects close to infrastructure and hold an 85% interest in the Yarraloola and Buddadoo projects. They also have a 70% interest in the Croydon, Shepherd’s Well and Yarrie projects.
What did the company announce today?
The company gave an update on their Robe Mesa iron ore project in Yarraloola. The project, which is located 100kms southwest from Karratha, has the potential for shipping iron ore grade but also has quite an amount of lower grade iron ore.
Source: CZR Resources
CZR said their pre-feasibility study at Robe Mesa is going well and will be finished by this December.
The company said they’ve been in discussion with potential customers about pricing and demand, and found through their conversations that there’s a strong demand for lower grade iron ore.
As they noted:
‘The feedback from customers has been very positive, revealing there is strong demand in the market for lower-grade ore. This is illustrated by the product discount applicable to the market-leading 56% Fe ore being at its lowest level since 2016.
‘These discount rates, which are derived from the price for benchmark 62% Fe ore, mean that 56% Fe product similar to that which would be produced at Robe Mesa, is currently selling for more than 100% [Dry Metric Tonnes] DMT on a CFR [cost and freight] basis.’
According to the company, Robe Mesa has a JORC 2012 compliant indicated and inferred resource of 84.5Mt at 53.8%Fe. This is using a cut-off of 50%Fe.
CZR has already completed three rounds of RC drilling and are looking at bringing Robe Mesa into production, but to do so they’ll need to change their exploration licence to a mining lease.
Iron ore prices have been on a high this year
It’s mainly because of a supply issue. Brazil’s iron ore giant Vale has struggled to keep activities running this year, with the pandemic and the weather, plus a dam bursting last year. The company had to revise down their 2020 production guidelines in April.
At the same time, China’s demand for iron ore has stayed strong this year even with the pandemic, which has pushed prices up. Which might not be too surprising as China is the largest consumer of iron ore in the world.
Will iron ore prices stay high?
It all depends on the supply. If Vale can continue production without disruptions, it will push iron ore prices down as supply increases. Already Brazilian iron ore exports increased by 36% in the third quarter of the year compared to the previous quarter.
So far, an effect from higher iron ore exports has been the strengthening of the Aussie dollar against major currencies like the US dollar, the Euro and the pound.
How will the Aussie dollar move next?
Check out our latest report, ‘Will the Aussie Dollar Enjoy a Post-Pandemic Resurgence?’ where editor Greg Canavan from The Rum Rebellion tackles this question.
To download his free report, click here.