WPG Resources Ltd : 2012-01-24 WPG returns to the iron ore industry at Giffen Well.pdf (3291 KB)

ASX and Media Release

Back in the game - WPG returns to the iron ore industry at Giffen Well

WPG Resources Ltd (ASX:WPG) withdrew from the iron ore sector when it sold its iron ore assets to OneSteel in October 2011 for approximately $320 million.
The Company is pleased to advise that it has now re-entered the iron ore business in South Australia with the signing of binding Heads of Agreement with Brisbane based Maosen Australia Pty Ltd covering EL 3945 at Giffen Well.
Giffen Well was originally part of the South Australian Steel and Energy Project (SASE) but had been relinquished by the time WPG acquired the Peculiar Knob and Hawks Nest tenements from SASE in 2006. Its location is shown below.

24 January 2012

ASX Announcement - 24 January 2012

Significantly Giffen Well lies within the Green Zone of the Woomera Prohibited Area
(WPA) as shown below. It is not in the more sensitive Red or Amber Zones.
Giffen Well is just 25 kilometres from the Carnes siding on the Central Australian railway line. There is direct rail access to WPG's port facilities at Port Pirie, a distance by rail of 550 kilometres.
Ground geophysical and drilling programs carried out as part of the SASE project outlined a significant deposit of magnetite BIF at Giffen Well that is part of the Wilgena Hill Formation of Paleoproterozoic age and a continuation of the Hawks Nest BIF stratigraphy. The Giffen Well area lies adjacent to the large north-east trending Bulgunnia Shear Zone along with a number of other significant mineral deposits and prospects including Prominent Hill and Hawks Nest.
The previous drilling at Giffen Well focussed on the magnetite BIF. However the BIF is in places in contact with granite of the Hiltaba Suite. This is a geological setting that is analogous to that at Peculiar Knob where high grade (>60%Fe) massive hematite is located adjacent to Hiltaba aplite and granite in the footwall. These contact zones at Giffen Well are considered to be prime conceptual targets that
have good potential for the discovery of DSO haematite orebodies such as that at
Peculiar Knob and Buzzard at Hawks Nest.
Previous drilling at Giffen Well consists of 58 drill holes of which 32 were vertical holes drilled as part of two regional drilling programs. The other 26 holes comprised
25 inclined RC percussion holes and 1 diamond drill hole that were sited on six east-west traverses and designed to test ground magnetic and gravity anomalies. Traverse spacing ranged from 300 metres to 800 metres and the hole spacing was nominally 100 metres. Hole depths ranged from 52 metres to 114.2 metres.
The location of the existing drill holes is shown in the drawing below.

ASX Announcement - 24 January 2012

A summary of significant BIF intersections is listed in the following table.

Hole Number	MGA94 m East	MGA94 m North	Depth From (m)	Depth To (m)	Interval (m)	Fe Grade (%)
GW001	477162	6647178	2	81	79	37.1
GW005	476092	6647233	16	70	54	32.3
GW006	475911	6647237	0	20	20	40.3
GW007	477078	6647181	0	88	88	34.0
GW008	477240	6647176	4	100	96	34.8
GW009	476970	6647191	0	60	60	32.5
GW011	476378	6645576	8	100	92	35.1
GW012	476482	6645575	16	100	84	24.7
GW015	476738	6646389	24	40	16	39.2
GW016	476826	6646383	8	92	84	30.9
GW019	477924	6647982	32	56	24	33.1
GW020	477445	6647526	0	100	100	39.2
GW021	477543	6647524	36	68	32	35.4
GW024	477051	6646802	12	100	88	35.0
GW025	477152	6646802	0	100	100	34.1

ASX Announcement - 24 January 2012

Note that the Fe grades at Giffen Well are high and are similar to those at Hawks Nest. The grades are much higher than many of the magnetite deposits elsewhere in South Australia, and in particular those for the Braemar iron formation in the Peterborough - Broken Hill area, and the Eyre Peninsula.
A typical drilling section at Giffen Well is shown in the drawing below. Note that the BIF subcrops on this section. It forms a strike ridge on other sections, where BIF scree is well developed at the surface.
The combination of high grades and shallow depth suggest low unit mining costs per Fe unit mined.
The spacing of the 26 deeper holes drilled previously on the main BIF strike ridge is too wide to enable a JORC compliant resource to be estimated at this stage of project's development. However WPG has outlined an exploration target of BIF mineralisation in the range 390 - 500 million tonnes at a grade of between 33% and
38% Fe. This exploration target is based on the drill hole and other data currently available and is conceptual in nature. There has been insufficient exploration to define a mineral resource for this exploration target, and it is uncertain if further exploration will result in the determination of a mineral resource in this area.
Preliminary beneficiation tests carried out as part of the SASE project suggest that a high grade iron concentrate of about 69% Fe with very low levels of alumina and phosphorous may be readily produced from the Giffen Well magnetite BIF.
WPG plans to commence a substantial program of systematic resource development drilling that will provide the basis for a preliminary feasibility study. If this is positive as expected, a joint venture will be formed with Maosen to develop the project.

ASX Announcement - 24 January 2012

The key commercial terms of WPG's agreement with Maosen are as follows:

• WPG will hold its interest in Giffen Well through its subsidiary Giffen Iron Pty

Ltd (GIPL);

• GIPL will pay an access fee of $200,000 (plus GST) and WPG will allot

$330,000 worth of WPG shares to the vendor when the last of the conditions (renewal of tenement, Defence and landowner access, Native Title (Exploration) agreement) are satisfied;

• The WPG shares will be issued at the higher of 10 cents per share or a 20%

premium to the 30 day VWAP on the date of issue;

• GIPL will pay a modest annual retainer to the vendor in recognition of services provided;

• GIPL will carry out a drilling program aimed at outlining a 500 million tonne resource, and will complete a PFS that will cost an estimated total of $1 million;

• GIPL can earn up to an 82% joint venture interest in the project by the payment of $5 million to the vendor and funding a bankable feasibility study;

• If a decision to develop a mine is taken GIPL will pay a further $10 million to the vendor, at which time Maosen has the right to decide whether to retain its equity interest in the project or exchange it for a royalty of $0.70 per tonne of ore mined; and

• The non iron ore rights will remain with Maosen.

WPG regards Giffen Well as one of the best iron ore project opportunities available in Australia. For a range of reasons, very little work has been done on it in the last 4 years - the iron ore boom has largely passed it by. WPG is looking forward to advancing the project as aggressively as this can reasonably be achieved over the next few months and years.
The agreement with Maosen was signed yesterday, Chinese New Year. The omens are good for new business ventures in the Year of the Water Dragon.
Gong Xi Fa Cai!

Competent Person

The review of exploration activities and results contained in this report are based on information compiled by Mr Gary Jones, a Member of the Australasian Institute of Mining and Metallurgy. He is Technical Director of WPG Resources Limited and a full time employee of Geonz Associates Limited. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Gary Jones has consented in writing to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Further Information

For further information please contact WPG's Executive Chairman Bob Duffin, on [phone] or 0412 234 684.