Sheffield acquires advanced exploration projects from Iluka

Dec. 29, 2010 - Bulk minerals explorer Sheffield Resources announced that it has entered into an agreement to acquire three mining leases and a retention licence from Iluka Resources Limited.
The tenements comprise the West Mine North (M70/872, M70/965 and M70/1153) and Ellengail (R70/35) exploration projects which are located near Eneabba in Western Australia's mid-west region. The purchase further consolidates Sheffield's 2,500km2 tenement holding in the North Perth Basin HMS province.
Sheffield will purchase 100% interest in the tenements for a consideration of $150,000 and a 1.5% gross sales royalty. In addition, Sheffield has agreed to continue discussions with Iluka in relation to the sale of synthetic rutile ilmenite extracted from the tenements.
The tenements may also be prospective for coal. The West Mine North tenements are situated just 4km to the north of the Coolimba thermal coal project. A third party, Sword Nominees Pty Ltd, retains the right to a coal royalty if coal is produced from tenements M70/872 and M70/965.
Commenting on the transactions, Sheffield's Managing Director Bruce McQuitty said, "The acquisition of these tenements provides Sheffield with advanced exploration projects on granted mining tenure near existing infrastructure, offering opportunity for near-term development."
"These projects are more suited to development by a junior company and fit Sheffield's strategy to build multiple HMS projects in the district capable of supporting a flexible mobile mining plant."
The company intends to undertake initial drilling of the projects as soon as possible after transfers of title, access and regulatory approvals have been obtained.
West Mine North is situated immediately along strike to the north of Iluka's Eneabba West mine and is essentially a continuation of the high grade strand mineralisation that was dredge mined at Eneabba West in the 1990's. The project lies wholly within cleared freehold land.
Extensive drilling (598 RC air core holes for 15,000m) has been completed on a 50m x 30m pattern in the southern half, and on a 200m x 30m pattern in the northern half, of the West Mine North project. This drilling has outlined a mineralised zone at 2% HM cut-off with approximate dimensions 100-170m wide x 10-15m thick (locally up to 20m thick), extending over a strike length of 3km. A high grade zone of strand mineralisation is surrounded by a lower grade (1-2% HM) halo which, in turn, is overlain by 10-15m of unmineralised overburden.
A total of 105 mineralogical analyses on the project indicate a mineral assemblage comprising 5.6% zircon, 6.3% rutile, 54.3% ilmenite (60.7% TiO2) and 1.6% leucoxene. The high TiO2 ilmenite may be suitable as feed for chloride process or synthetic rutile production.
Ellengail is located 3km along strike to the north of West Mine North. A total of 271 air core drill holes (for 4,231m) on a 200m x 30-60m pattern have outlined a zone of mineralisation at 1.5% HM cut-off with approximate dimensions 2.5km long x 200-350m wide and between 10-15m thick (locally up to 20m thick). Near surface lower grade dunal mineralisation covers the strand mineralisation in the northern half of the deposit. Laterite and cemented overburden occur on the margins of the deposit but do not affect the central portion of the deposit.
A total of 19 mineralogical analyses have been completed on the project which indicate mineral assemblage of 10% zircon, 3.4% rutile, 58.6% ilmenite (54.7% TiO2) and 9.2% leucoxene.