Cehegin Iron Ore Project Spain Shareholder Update – June 2021

Basemap: total residual magentic anomaly

Basemap: total residual magnetic anomaly

Cehegin Iron Ore Spain Update June 2021

As of the end of May the drill program has been moving forward as expected and achieving anticipated objectives.

  • Zone 5 – Soledad: The last two drill holes of the six have been completed.
  • Zone 3 – El Coloso: Drilling has begun and two of the proposed seven drill holes have been completed. One of them was to twin a drill hole in order to validate the historical data and the other one focused on the exploration of the ore body continuity.

The twin drillhole has confirmed the historical information in terms of elevation and thickness of the mineralized zone.  The other, an exploratory drillhole has confirmed the existence of iron ore in the geophysical anomalies studied.  Both drill holes did not pass through all the mineralization, which indicates the bodies are open at depth.

The remaining drill holes in zone 3 will be completed by mid-June due to regulations not allowing drilling from July to late August in this area due to potential hazards of forest fires.

Drilling samples

Drilling for samples

Here are the key highlights of the update:

Drill Hole #7 reached a depth of 135 meters and is a twin of two holes drilled in 1982. The drillhole met its objective of confirming mineralization and “cuts a very high thickness of the ore body” and remain open at depth. Drill Hole #8 reached a depth of 90.75 meters and cut two mineralized ore bodies between 8.2 and 25.65 meters and 84.4 to 90.75 meters and remain open at depth.

Core preparation is underway for lab testing and results will be communicated as received.  A mine plan is being finalized by CRS which needs to be submitted with our request for approval of the 60,000 tonne/year processing plant. The iron ore content is evident in this short video (below):

Are we entering another commodity Super Cycle?

A common question these days.  Many feel we are.  The S&P GSCI is a benchmark commodities index and from March 2020 to March 2021 it has risen 86%.  Other commodity indexes worldwide are reflecting such statistics.  The world needs to catch up from 18 months of COVID and this upcoming “catch up” surge is going to add fuel to the fire of an already very robust future commodity demand.

Core preparation for lab testing

Core preparation for lab testing

Super Cycles are relatively rare but can last decades.  This is a period where broad commodity prices in general increase significantly over many years.  There are many reasons for this happening from Central Banks flirting with near zero interest rates; the need for governments to kick start their economies; and the result of companies showing past restraints on additional investment in mineral exploration and capex for production increases.   The domino effect is the result.

If the first part of 2021 is any indication a commodities bull market is on the horizon and will have plenty of legs. The future is impossible to predict but all indicators are supporting a very robust steel demand for many, many years to come.

There are huge gains in Chinese industrial activity with many important industrial sectors showing 2021 year to date increases of 15% to over 50% in steel manufacturing, cement, automotive, chemicals and so on.

Data suggests China is liquidating diverse inventories to supply steelmaking ingredients.  As well their iron ore imports are up 6.7% or approximately 2 ½ times more than the combined outputs of the largest iron ore miners combined.  Higher demand for iron ore and higher prices as we move forward appears to be the norm.

Higher grade iron ore with low impurities, such as Mineworx’s Cehegin deposit, will have an additional premium as the more technically advanced steel mills are searching for such materials to enhance processing in their operations as well as reducing their carbon footprint by way of cleaner burning input materials.

Many factors such as these are an indication of continuing high interest in iron ore projects and increased valuations for concessions such as Cehegin which further benefits shareholder value.


Greg Pendura

President & CEO of Mineworx

Cehegin Iron Ore Spain Update April 2021

Located near the picturesque Southern Spanish town of Cehegin, sits the Cehegin Iron Ore project, which is owned by Solid Mines Espana, a 100% subsidiary of Mineworx. It is comprised of 61 concessions covering over 7,000 hectares. Up until 1989, the mine produced a superior product of high-grade iron ore concentrate with low impurities. mineworx spanish update

The company has assembled a strong team for successful development of this project including geologists, qualified engineers, legal and senior administrative personnel. Most of this team is based in Spain and has the local connections required to move this project forward. The area is blessed with excellent weather that permits year-round activity. The local area surrounding the project has excellent existing infrastructure including access to skilled labour, rail, highways, utilities, and the deep-water port of Cartagena, which is only 115 km away.

Due to the historical activity, the company was able to access information on parts of the concessions from the extensive drilling and metallurgical work done by the previous operator. This historical data is based on 38,000m of drilling data but due to the number of years since the work was completed along with Mineworx’s inability to physically inspect all the cores used for the accumulation of this historical data, the information is not NI 43-101 compliant under current Canadian Institute of Mining (CIM) standards.

mineworx imageBased on this data the initial focus was to confirm a probable resource of up to 60 million tonnes. An extensive 1233 km aeromagnetic survey was planned by Stratagex Ltd., an internationally recognized geophysical consulting firm, and executed by IGT (International Geophysical Technology S.L).  Photo imaging indicated the resource extended in distance and in-depth.  The company has filed and has been granted additional concessions based on the results of this fly-over.

This information was further analysed in 2020 by the Spanish geological firm CRS Ingenieria.  From this data, using a density of 3.2 t/m3 the potential reserve was increased to 101.27 million tonnes, which has clearly exceeded our expectations.

In March 2021, the company received all the required government approvals including environmental to allow for further development to commence.  The primary objective of the current drill program, which will start very quickly, is to validate historical data and create a NI 43-101 compliant resource report.

The drilling company has been engaged and is currently being mobilized along with a local construction company which is managing site preparations. The plan entails a 21-borehole drill program of approximately 2,100m, which was based on analysis of historical data by our team.

Drilling will take approximately 6-8 weeks and analysis/metallurgical testing approximately 10-12 weeks.  We anticipate a NI 43-101 compliant resource report to be available in the late summer of this year.  The budget for the drill/work program is   $750,000, which would include approximately $150,000 for the analysis and reporting.

This 2021 drill program is not intended to quantify the entire resource as the aeromagnetic survey has shown potential deposits up to 500m deep, which the current program will not reach. We are planning a larger additional drill program after reviewing the data from the preliminary program.  The objective of this secondary program will be to gather additional information on an enlarged potential resource within the existing concessions.

rocks from miningImportantly, in November 2020, the Spanish government classified the project as a strategic initiative, which creates benefits for the company such as grants, subsidies, and a significant amount of future time saving by “cutting through the bureaucratic red tape”, which had previously resulted in excessive government delays.

An additional benefit that a strategic declaration presents is that the company can operate a technical feasibility operation. Under this program, the company can request approval to install a mobile treatment plant that could produce 60,000 tonnes per year to substantiate the commercial viability of a large-scale production facility. The company is currently completing studies to determine a viable mine plan and economic feasibility on moving forward with this small-scale operation. This decision is expected to be made in the summer of 2021 and has a projected capital cost of $1 million.

Preliminary work on economic modeling was done in 2014 and was reviewed and updated in early 2021. The new resource information is leading the company to investigate a larger operation than first anticipated, which could produce 1 million tonnes per year of high-quality concentrate.

The company’s long-standing Off Take Agreement with Glencore remains in place and offers attractive terms while eliminating the marketing requirement from the organization.

The pricing of Iron ore is generally quoted on as a delivered to a port in China basis in USD with a standard grade of 62%. Current iron ore pricing is approximately $168 for a dry tonne. The pricing in the current market reflects a recovery to levels previously seen around 2010/2011 and is projected to remain at these levels. Chinese steel output is rising again increasing by 12.9% in February.  Chinese steel mill stockpiles have been drawn down considerably and the stage appears to have been set for bigger steel shortages by the end of 2021.

Iron ore from Cehegin has historically been a higher grade of 65% with low impurities., Traditionally this premium has added approximately $10/tonne in value. It is projected that the concentrate produced by the project would have 9% moisture content.

Costs per tonne of wet concentrate, including mining, transport to plant, processing, transport to Cartagena and general overhead is estimated to be USD $53/tonne plus or minus 10%.  The port costs, freight to China, and marketing would be added to this estimate.

The company believes that the investment in exploration will confirm the additional resources as CIM compliant reserves and allow for a detailed mine plan to be developed coupled with a comprehensive economic analysis.  In addition, the development of a small-scale treatment plant would provide initial cash flows to fund further development activities while confirming the high quality of the product.

Shareholders have inquired about the company’s strategy to best monetize the project.  As with most mining projects, the overall value is associated with proven reserves that are economically attractive.

Our current exploration plan’s two main objectives are validating the existing historical data to have a CIM compliant reserve and to gain further knowledge on the additional resources identified in the aeromagnetic survey.

We believe this additional information on the potential resource within the concessions will increase our CIM proven resource numbers.  Accordingly, these two work programs have the potential to substantially increase the value of the property.

In our view, receiving authorization to move forward on a 60,000 tonne/year production facility, either on our own or through a joint venture, would substantially increase the value of the asset and accordingly, the company’s valuation.  To go one step further, to ultimately receive approval for a large, 1 million tonne/year commercial operation would again significantly increase the value of the property.

As the company moves forward, we will be evaluating opportunities to increase shareholder value, and this might not be necessarily based on waiting for regulatory approvals for a large-scale commercial production facility.

Opportunities could include JV relationships; royalty relationships; an outright sale of the asset or a spin-out arrangement into a separate NEWCO.  To ensure that these opportunities are available the company must push the exploration and development forward which includes completion of our present work program, getting approval for the follow up work program (which we have already started) and obtaining approvals for a small-scale (60,000 tonne/year) plant.  The corporate plan is for these milestones to be accomplished during the current year.

All members of the Mineworx team very much understand that shareholders have not only shown incredible support as evidenced with the success of the Rights issue and subsequent Private Placement, but also extreme patience.

We believe that meeting a series of 2021 objectives in combination with dramatically increasing information flow, should have a considerable positive impact on the company’s valuation. As we reach each milestone, not only do we expect confidence levels to increase amongst current shareholders but a corresponding positive reaction from the market in general.

In closing, we have the funds, the plan, and the team to make 2021 memorable.

It is management’s job to make that a reality.


Greg Pendura, CEO Mineworx

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