Blacksmith Project Poised for Growth with $3M Royalty Sale and Mining Proposal
Red Hawk Mining has made significant progress on its Blacksmith Iron Ore Project, submitting a mining proposal and reporting positive sinter test results, while managing tight cash reserves through asset sales and loan negotiations.
- Mining proposal submitted for Blacksmith Project's first five years
- Sinter testwork confirms Blacksmith ore as favourable sinter feed
- Ongoing haulage route optimisation to reduce costs and increase throughput
- Disposal of non-core royalty interest for $3 million boosts liquidity
- Negotiations underway for short-term working capital loan with major shareholder
Blacksmith Project Development Advances
Red Hawk Mining Limited (ASX: RHK) has reported steady progress on its flagship Blacksmith Iron Ore Project in the Pilbara region during the December 2024 quarter. The company submitted a comprehensive mining proposal to the Department of Energy, Mines, Industry Regulation and Safety (DEMIRS), detailing plans for the initial five years of open pit mining and associated infrastructure development. This submission marks a critical milestone as Red Hawk moves closer to finalising its definitive feasibility study (DFS).
The Blacksmith Project, located approximately 70km northwest of Tom Price, is positioned as the largest direct shipping ore (DSO) project in the Pilbara outside the major producers. Red Hawk continues to focus on optimising the scale and logistics of the project to maximise shareholder value, with ongoing work to reduce haulage distances and increase trucking utilisation rates.
Encouraging Metallurgical Test Results
Supporting the DFS and market development efforts, metallurgical sinter testwork conducted by Beijing CISRI-NMT Engineering Technology Co. Ltd yielded promising results. Two blends of Blacksmith ore substituted into typical Chinese coastal sinter feed blends performed well, producing quality sinter products without significant negative impacts. This positions Blacksmith’s DSO material as a favourable component in sinter feed blends, potentially avoiding discounts that often affect new ore sources.
Logistics and Port Capacity Optimisation
Red Hawk is actively exploring options to enhance export capacity beyond the 5 million tonnes per annum considered in the pre-feasibility study (PFS). Discussions with Pilbara Ports and other users of the Utah Point bulk handling facility at Port Hedland are ongoing to secure necessary port capacity for initial development. The company is also assessing medium- to long-term expansion possibilities, including potential greenfield or brownfield bulk commodity export facilities to reduce haulage distances.
Financial Position and Funding Strategy
As at 31 December 2024, Red Hawk held $1.3 million in cash, reflecting a tight liquidity position given ongoing project development costs. The company generated $150,000 from the disposal of a non-core investment during the quarter and subsequently received $3 million from the sale of a non-core royalty interest. To bolster working capital, Red Hawk is negotiating a short-term loan agreement with its major shareholder, TIO (NZ) Limited, expected to be finalised and announced within the current quarter.
Management acknowledges the need for additional funding to sustain operations and advance the Blacksmith Project, with potential equity or debt arrangements under consideration. The company retains flexibility to adjust the timing and scope of its work program in response to funding availability.
Outlook and Strategic Positioning
Red Hawk’s leadership, including Managing Director Steven Michael, remains focused on unlocking the Blacksmith Project’s value amid a dynamic Pilbara iron ore landscape. Engagement with stakeholders, including participation in the Port Hedland Economic Forum, underscores the company’s commitment to securing infrastructure and export solutions that will underpin long-term success.
With a substantial mineral resource base exceeding 240 million tonnes at an average grade near 59.3% Fe, the Blacksmith Project holds significant potential as a near-term iron ore supplier to key Asian steel markets. The coming months will be pivotal as the DFS progresses and funding arrangements crystallise.
Bottom Line?
Red Hawk’s Blacksmith Project is advancing steadily, but securing funding and infrastructure remains critical to translating potential into production.
Questions in the middle?
- Will Red Hawk finalise its short-term loan with TIO (NZ) Ltd and on what terms?
- How will haulage and port optimisation impact the project’s cost structure and timeline?
- What are the prospects and timing for the DFS completion and mining approvals?