Macarthur Minerals : Management’s Discussion & Analysis Year







ACN 103 011 436

Management’s Discussion and Analysis

(Form 51-102F1)

For the Year ended March 31, 2022

Information as of June 30, 2022 unless otherwise stated

Note to Reader

The following Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of Macarthur Minerals Limited (“Macarthur Minerals” or the “Company”) for the year ended March 31, 2022 has been prepared by management, in accordance with the requirements of National Instrument 51- 102, as of June 30, 2022 (unless otherwise stated).

This MD&A should be read in conjunction with the Company’s Audited Annual Financial Statements for the year ended March 31, 2022, together with the notes thereto, as well as the Company’s previous quarterly and half yearly financial and MD&A reports throughout the year. The Audited Annual Financial Statements for the year ended March 31, 2022 are prepared in accordance with International Financial Reporting Standards (“IFRS”).

Forward-Looking Information

This MD&A includes certain statements that may be deemed “forward-looking statements” within the meaning of applicable Canadian and Australian securities legislation. All statements in this MD&A, other than statements of historical facts, are forward-looking statements. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate, plans and similar expressions, or which by their nature refer to future events. These forward-looking statements include, but are not limited to activities, events or developments that the Company believes, expects or anticipates will or may occur in the future. Although the Company believes that expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The material factors or assumptions used to develop forward-looking information include prevailing and projected market prices, exploitation and exploration estimates and results, continued availability of capital and financing, and general economic, market or business conditions. Factors that could cause actual results to differ materially from those in forward-looking statements include, without limitation: fluctuations in exchange rates and certain commodity prices, uncertainties related to mineral title in the projects, unforeseen technology changes that results in a reduction in minerals demand or substitution by other minerals or materials, the discovery of new large low-cost deposits of minerals and the general level of global economic activity. Readers are cautioned not to place undue reliance on forward-looking statements due to the inherent uncertainty thereof. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties. The forward-looking statements contained in this MD&A and are made as of the date of this MD&A or as of the date or dates specified in such statements and except as may otherwise be required pursuant to applicable laws, the Company does not assume any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Inherent in forward-looking statements are risks and uncertainties beyond the Company’s ability to predict or control, including, but not limited to, risks related to the Company’s inability to identify one or more economic deposits on its properties, variations in the nature, quality and quantity of any mineral deposits that may be located, variations in the market price of any mineral products the Company may produce or plan to produce, the Company’s inability to obtain any necessary permits, consents or authorizations required for its activities, to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies, and other risks identified herein under “Risk and Uncertainties”.

These forward-looking statements are made as at the date hereof or as of the date or dates specified in such statements and the Company does not intend and does not assume any obligation, to update these forward- looking statements, except as required by applicable law. If the Company does update one or more forward- looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward- looking statements and investors should not attribute undue certainty to or place undue reliance on forward- looking statements.

Macarthur Minerals Ltd

Management’s Discussion and Analysis

For the year ended March 31, 2022

TSX-V: MMS, ASX: MIO

Discussion on Operations

BACKGROUND

Macarthur Minerals Limited is an Australian public company listed in Canada on the TSX Venture Exchange (“TSX-V”) (symbol: MMS), Australian Securities Exchange (“ASX”) (symbol: MIO) and OTCQB Venture Market (“OTCQB”) (symbol: MMSDF). Macarthur Minerals has three iron ore projects in the Yilgarn region of Western Australia. The Company also has two exploration project areas in the Pilbara, Western Australia for targeting iron ore. In addition, Macarthur Minerals has lithium brine interests in the Railroad Valley, Nevada, USA.

WESTERN AUSTRALIAN IRON ORE PROJECTS

Lake Giles Projects

Macarthur Minerals’ Lake Giles Iron Ore Projects (“Lake Giles Projects”) are located on mining tenements covering approximately 62 km2, 175 kilometres (“km”) northwest of Kalgoorlie in Western Australia. Within the tenements, at least 33 km strike extent of outcropping banded iron formation (“BIF”) occurs as low ridges, surrounded by intensely weathered and mostly unexposed granites, basalts and ultramafic rocks.

The Lake Giles Projects are situated in the Yilgarn Region of Western Australia. The Yilgarn Region is host to many significant mineral deposits that have been, or are being, mined for iron ore. The tenements cover the Yerilgee greenstone belt which is some 80 km in length and lies within the Southern Cross Province of the Yilgarn. The Lake Giles Projects are approximately 90 km from the existing Perth Kalgoorlie Railway that has a direct connection to the Port of Esperance in Western Australia, where it is intended that ore from the Projects will be shipped. Export is subject to available capacity, which is not certain. The Lake Giles Projects (comprising the Lake Giles Iron Project, incorporating the Moonshine magnetite deposits and the Ularring Hematite Project) are located approximately 450 km east north-east of the coastal city of Perth, Western Australia, and approximately 115 km west of the town of Menzies. Exploration at the Ularring Hematite and Lake Giles Iron Projects has been sufficient to allow the estimation of Mineral Resources for both projects and Mineral Reserves at the Lake Giles Iron Project.

Lake Giles Iron Project

On August 12, 2020 Macarthur Minerals released an updated Mineral Resource estimate for the Lake Giles Iron Project1. The Mineral Resource estimates include Measured Resources of approximately 53.9 Mt @ 30.8% Fe, Indicated Resources of 218.7 Mt @ 27.5% Fe and Inferred Resources of 997.0 Mt @ 28.4% Fe.

The resource formed the basis of a Feasibility Study (“FS”) that was released to the market on April 11, 2022. The FS was based on a 3 Mtpa magnetite operation incorporating the Moonshine and Moonshine North magnetite deposits. The FS confirms the commercial viability of the Project to produce 3 Mtpa (dry basis) of high-grade magnetite concentrate over a long mine life of 25 years from Proven and Probable Mineral Reserves. The key production and financial outcomes are presented in Table 12.

Table 1. Lake Giles Iron Project – Feasibility Study Production and Financials Summary

Production

Ore mined

236.6 Mt

Waste mined

624.9 Mt

Total mined

861.5 Mt

Strip ratio

2.64

Concentrate produced

74 Mt

Concentrate iron grade

66.1%

Plant recovery

31%

Financials

AUDm

USDm

Sales revenue

12,614

8,956

Operating Expenses

8,116

5,672

1 Refer to the Company’s news release dated August 12, 2020, titled “Moonshine Magnetite Resource Upgrade.”

2 Refer to the Company’s news release dated March 21, 2022, titled “Positive Feasibility Study Results for Lake Giles Iron Project.”

Macarthur Minerals Ltd

Management’s Discussion and Analysis

For the year ended March 31, 2022

TSX-V: MMS, ASX: MIO

Initial Capital Expenditure

Construction capex

801.1

568.8

Mining overburden pre-strip

61.6

43.8

Total initial capital

862.7

612.5

Future Capital Expenditure

Sustaining capital

203

144.1

Deferred capital – Tailings

39.8

28.3

Capitalised non-operational waste mining

355.7

252.5

Total future capital

598.0

424.6

Closure Expenditure

Closure and rehabilitation

58.2

41.3

Total Operating Cash Flows

3,625

2574

Taxes & Royalties

Tax paid

873

620

Royalties

631

435

Valuation

AUDm

USDm

NPV (6%) Pre-tax

816

579

NPV (6%) Post-tax

443

314

IRR Pre-tax

13.0%

IRR Post-tax

10.1%

The FS published on March 21, 2022 underpins a maiden Mineral Reserve of 237 Mt, supporting a 25-year mine life. The independent technical report, entitled “NI 43-101 Technical Report and Feasibility Study, Lake Giles Iron Project, Menzies, Western Australia” with an issue date of April 11, 2022 was prepared in accordance with the requirements of National Instrument 43-101 (“NI 43-101”) and released to the market on April 11, 20223 The technical report is filed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com (filing date: April 11, 2022) and on the Company’s website at www.macarthurminerals.com. The Mineral Reserves are presented in Table 2.

Table 2. Mineral Reserves – Lake Giles Iron Project (reported at a cut-off of DTR >15%)

Category

Tonne

Head Grades (%)

Concentrate Grades (%)

s (Mt)

Fe

SiO2

AI2O3

P

LOI

DTR

Fe

SiO2

AI2O3

P

LOI

Moonshine

Proven

34.2

28.1

51.6

1.2

0.04

1.7

30.5

65.9

6.8

0.2

0.02

-0.6

Probable

166.4

27.2

51.9

1.4

0.05

1.4

30.7

66.6

6.2

0.1

0.02

0.0

Sub-

total

200.6

27.4

51.9

1.4

0.04

1.4

30.6

66.5

6.3

0.1

0.02

-0.1

Moonshine Nth

Proven

17.8

35.4

35.4

2.2

0.06

4.2

34.3

66.5

5.0

0.3

0.03

-0.9

Probable

18.2

30.4

44.7

1.3

0.05

2.9

35.9

63.2

9.4

0.2

0.04

-0.3

Sub-

total

36.0

32.9

40.1

1.7

0.05

3.5

35.1

64.8

7.3

0.3

0.05

-0.6

Combined

Proven

51.9

30.6

46.0

1.5

0.05

2.6

31.8

66.1

6.1

0.2

0.03

-0.7

Probable

184.7

27.6

51.2

1.4

0.05

1.5

31.2

66.2

6.6

0.1

0.02

-0.1

TOTAL

236.6

28.2

50.1

1.4

0.05

1.8

31.3

66.2

6.5

0.1

0.02

-0.2

On March 26, 2021, the Company made application for two “water search miscellaneous licenses” for the purpose of exploring for groundwater to support magnetite processing for the Lake Giles Projects. The applications cover 533 km2 of the Rebecca Palaeovalley up to 35 km east of the Project. Prior to these applications, the Company engaged CGG to undertake an aerial electromagnetic (“EM”) survey of the palaeochannels as announced on March 26, 2021.

3 Refer to the Company’s news release dated April 11, 2022, titled “Technical Report for Lake Giles iron Project Feasibility Study.”

Macarthur Minerals Ltd

Management’s Discussion and Analysis

For the year ended March 31, 2022

TSX-V: MMS, ASX: MIO

The survey data will be used to define groundwater drilling targets.

Ularring Hematite Project

The Ularring Hematite Project’s Mineral Resources are comprised of Indicated Mineral Resources of approximately 54.5 Mt @ 47.2% Fe and approximately 26 Mt @ 45.4% Fe Inferred Resources. The Mineral Resource estimates were prepared by CSA Global on behalf of Macarthur Minerals (NI43-101 Technical Report, 20124) and reported in accordance with the CIM Definition Standards for Mineral Resources and Reserves 2014.

The Company has received approval to develop an iron ore mine for the Ularring Hematite Project and associated infrastructure at the project location under the Environmental Protection Act 1986 and the Environmental and Biodiversity Conservation Act 1999. On March 26, 2021, the Company made application for two miscellaneous licences to support the development of a mining camp and crushing and screening operations near the Snark deposit of the Ularring Hematite Project5.

During the year, the Company undertook a programme of work to ensure that required approvals, mine planning and transport solutions are in place to enable a short run-up to commencement of direct shipping ore (“DSO”) mining operations at the Snark and Drabble Downs deposits, subject to the iron ore price environment supporting the commencement of commercial DSO mining operations.

Ularring Hematite Project Development Activities

During the reporting period the Company made a number of material advancements in its strategy to deliver early-revenue hematite operations. A summary is set out below. The Company continues to examine options for an early production opportunity for its Ularring Hematite Project at Lake Giles, subject to a return to a supportive iron ore pricing environment for an Ularring product.

  1. Mine Planning

On May 26, 2021, the Company announced that it is advancing mine planning work to support intended hematite mining operations at Lake Giles in Western Australia. The Company has commenced work to prepare a mine plan for a DSO product under a mining campaign which will initially target the Snark and Drabble Downs deposits of the Ularring Hematite Project. For this purpose, in June 2021 Macarthur made an application for a Miscellaneous Licence covering an area of 74 hectares adjacent to the Snark DSO project to host non-process infrastructure6.

  1. Agreement with LAVO Hydrogen Technology Holding Pty Ltd

On June 1, 2021 Macarthur announced that it has signed a Strategic Partnership and Collaboration Agreement (“Agreement”) with LAVO Hydrogen Technology Holding Pty Ltd (“LAVO”) to investigate the facilitation of a staged technology solution that is intended to deliver a clear carbon reduction strategy for Macarthur’s flagship Lake Giles Iron Project, with a first phased roll-out to support Macarthur’s intended early hematite DSO mining operations at Ularring Hematite Project.

LAVO uses an innovative, patented metal hydride to produce hydrogen energy batteries. The battery system acts as a solar sponge, integrating with solar arrays to capture and store renewable energy for use when needed. The unit creates Hydrogen from water, stores the Hydrogen into LAVO’s patented metal hydride and generates electricity by converting hydrogen into power.

  1. Co-operationAgreement with Jin Sung International

On June 15, 2021, Macarthur announced that it had entered into a Co-operation Agreement with diversified Singaporean based conglomerate Jin Sung International Pte Ltd, paving the way for a potential strategic investment into Macarthur’s iron ore and non-iron ore assets. The non-bindingCo-operation Agreement sets

  1. NI 43-101 Technical Report filed October 1, 2012, titled “NI 43-101 Technical Report, Macarthur Minerals Limited, Pre-Feasibility Study, Ularring Hematite
    Project, Western Australia.”
  2. Refer to the Company’s news release dated March 26, 2021, titled “Additional tenements to support groundwater drilling campaign.”
  3. Refer to the Company’s news release dated June 29, 2021, titled “Lake Giles Ularring DSO Update: Macarthur makes application for additional tenure to support planned DSO operation.”

Macarthur Minerals Ltd

Management’s Discussion and Analysis

For the year ended March 31, 2022

TSX-V: MMS, ASX: MIO

out the terms upon which the parties intend to progress discussions on the development of a transaction involving a strategic equity investment.

A potential transaction between the parties may take the form of a strategic equity investment into Macarthur’s iron ore assets or non-iron ore assets, or the provision of direct project financing.

  1. Pacific National Agreement

On July 8, 2021, the Company announced that it had entered into a term sheet with rail haulage service provider Pacific National, for the transport by rail of up to 400,000 tonnes per annum of iron ore between Kalgoorlie and Esperance.

  1. Mine Gate Sale Agreement – GWR Group Limited

On July 14, 2021, Macarthur announced that it has signed a binding term sheet with an Australian iron ore producer GWR Group Limited (ASX: GWR) (GWR) under a deal which will enable Macarthur to complete a mine gate purchase from GWR of up to 400,000 tonnes per annum of DSO product from GWR’s Wiluna West Iron Ore Project, located in Western Australia for an initial period of 2 years, with the ability to extend for up to a further 2 years and a first right of refusal to purchase tonnages in excess of 400,000 per annum if Macarthur has access to matching rail and port capacity. The sale price for GWR’s DSO will reflect an equitable split of the realised sale price on a FOB basis at the ship rail, having regard to Macarthur’s costs to transport the product, which will be disclosed on an open book basis between the parties. The term sheet is subject to the parties entering into a definitive agreement following completion of the balance of the route to market arrangements by Macarthur on a basis that is commercially acceptable to both parties.

  1. Aurizon Rail Haulage Agreement

On August 5, 2021, Macarthur announced that it has agreed terms with Aurizon, for the transport of DSO at a rate of up to 500,000 tonnes per annum between West Kalgoorlie and Kwinana. The term of the agreement is for 12 months and is subject to conditions including Macarthur securing matching port capacity and Aurizon satisfying regulatory approvals.

The combined rail paths also provide an opportunity to export DSO lump and fines products secured from GWR under a recently announced mine-gate sale agreement.

  1. Shipping Containers

On September 23, 2021, the Company announced that it has secured access to 190 half height shipping containers to support DSO rail haulage services to Kwinana Bulk Terminal (KBT). Macarthur has a confirmed reservation of access to sufficient half height shipping containers with Seaco Australia Pty Ltd (Seaco) to support rail capacity under a recently announced binding rail haulage agreement with Aurizon.

Macarthur intends that leased half-height shipping containers will be loaded with iron ore and transported on a flat-bed rail freight service from Aurizon’s West Kalgoorlie rail siding to KBT at a rate of up to 500,000 tonnes per annum.

Treppo Grande & Mt Jackson Iron Ore Project

On February 15, 2018, the Company’s wholly owned subsidiary, Esperance Iron Ore Export Company Pty Ltd (“EIOEC”) made an application for Exploration License E77/2521 for the Treppo Grande Iron Ore Project (“Treppo Grande Project”). The Treppo Grande Project covers an area of 68 km2 and is located approximately 32 km west of the Lake Giles Projects. The project is also 35 km east of Mineral Resource Ltd’s (MRL) Koolyanobbing Iron Ore Operations and is in close proximity to established rail infrastructure to the Port of Esperance. This area had been held by a private exploration company wholly owned by renowned Kalgoorlie Prospector Mel Dalla-Costa for the past eight years under an Exploration License (EL77/1208). During this time, approval was granted for an exploration program of diamond drilling and geophysical mapping. The Treppo Grande Project has already benefited from flora and fauna baseline surveys indicating that the conservation values of Mt Manning are a lower priority than surrounding BIF ridges.

Disclaimer

Macarthur Minerals Limited published this content on 30 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 July 2022 07:32:06 UTC.

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Sales

Net income

Net Debt

P/E ratio
Yield
Capitalization 31,0 M
21,0 M
21,0 M
EV / Sales -1
EV / Sales 0
Nbr of Employees 0
Free-Float 94,2%

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