Gunson delivers positive results at Coburn Zircon Project

Feb. 23, 2010
Perth-based Australian mineral exploration company Gunson Resources recently wrapped up a Definitive Feasibility Study at the Coburn Zircon Project in Western Australia, encouraging the Company to step up its efforts to conclude a zircon offtake and investment agreement with a large overseas zircon consumer.
The financial modelling of the Project has been based on the sale of final heavy mineral products from the port of Geraldton, increasing the flexibility in marketing from previous studies.
Over the 23.5 year life of the Project, total revenue is estimated at $2.2 billion, with an operating cash surplus of $879 million, or $37 million per annum.
The Project returns, on a pre tax ungeared basis, a NPV of $163 million at an 8% discount rate, with an IRR of 16.8%.
Approximately 67% of the revenue from the proposed mine is from zircon, for which industry experts TZMI forecast a significant supply shortfall commencing in 2013. By 2015, TZMI forecast that the real US dollar zircon price will increase by up to 46% from 2009 levels.
Managing Director David Harley said the Company expected that the newly published zircon study by TZMI would have a significant positive impact on zircon consumers seeking access to a long term supply of zircon through a strategic investment in the current severely depleted pipeline of new development projects.
Coburn is located 250 kilometres north of the regional centre and port of Geraldton in Western Australia, immediately south of Shark Bay and just outside the eastern boundary of the Shark Bay World Heritage Property.
The zircon-rich Amy Zone heavy mineral sand deposit at Coburn was discovered by Gunson in 2000 and has been the subject of three feasibility studies. The first, a Preliminary Feasibility Study, was completed in January 2003 and the second, a Bankable Feasibility Study, was released in December, 2004.
Because of its location close to the edge of the Shark Bay World Heritage Property, Coburn was the subject of a four year environmental approvals process, which culminated in approval for construction in March 2007, over 2 years after completion of the BFS.
A Definitive Feasibility Study designed to update and improve on the accuracy of the BFS, began in mid 2006. This DFS was not completed until December 2009, due to the failure of the Company's proposed Chinese offtake and investment partner, state controlled China Triumph International Engineering Company, to provide a competitive construction proposal after nearly two years of discussions that began in early 2007.