Ord River Resources (ASX: ORD) has delivered a 300% increase in the JORC Resource at its bauxite/alumina project in Laos to 77 million tonnes at a 10% cut off, providing a significant boost to the emerging large-scale alumina developer.
SRK Consulting completed the JORC Resource calculation for the SARCO LSI tenement, which is 49% owned by Ord River and 51% owned by China Nonferrous Metal Industry’s Foreign Engineering and Construction Company (NFC).
Importantly, the deposit is good quality with a low Silica content of 2.3%, with 29 million tonnes, or 37% of the upgraded Resource, in the higher confidence Measured category.
Peter Shou, Ord River’s managing director, said “this significant increase in both quantity and quality underpins our confidence in the SARCO project, and reaffirms our commitment to developing a 600,000t alumina refinery in Laos.”
SRK Consulting is in the process of completing its JORC Resource report on Yuqida the second SARCO tenement. The company is expecting an upgrade at Yuqida in the current quarter.
Sino Australian Resources (SARCO) is a joint venture company between Ord River Resources and NFC.
On August 8 Ord River reported that SARCO and NFC signed a second Memorandum of Understanding (MoU) for sale of alumina from the Laos Aluminium JV Project.
SARCO and NFC will enter into a minimum 20 year off-take agreement for SARCO to sell to an NFC-led buyer group alumina products from Laos.
Ord River is bullish that SARCO will develop the project into a world class alumina refinery with bauxite potential estimated to be to 2 billion tonnes.
The agreed annual sale quantity will be 600,000 tonnes and the sale price will be based on internationally recognised market prices, that will be adjusted accordingly to reflect market prevailing prices.
Prior to the construction of the planned alumina refinery in Laos, SARCO and NFC will convert this MoU into a binding contract that is compliant with internationally recognised standards.
The agreement completes the initial round of negotiations for the three most important building blocks for the planned construction of a 600,000 tonne alumina refinery in Laos, which has received strong support from the Lao and Chinese governments.
The other two significant milestones for the project were China Minsheng Banking Corporation’s letter of proposal for 70% debt financing and an MoU for a fixed price and fixed term EPC contract with NFC for US$600 million.
The alumina price is projected to rise to reflect a fundamental upward shift in long term demand curve. Fast growing nations including China demand alumina to supply their growing manufacturing base.
The refinery is well positioned to benefit from this expected price increase and value appreciation. Construction is expected to begin following the proposed initial public offering (IPO).
Ord River and NFC are looking to IPO their Lao Bauxite/Alumina Project, which could rank it second to Alumina Ltd (ASX: AWC) in size in Australia.
The potential equity raising involved could be as high as $180-200 million via an initial public offering on the ASX timed for the end of 2011 to early 2012.
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