Hope Downs and Beyond Presentation to Australian Iron Ore and

Why Investing in Australian Iron Ore 

Exploration? 

Hope Downs and Beyond 

Presentation to Australian Iron Ore and Steel 

Summit 2002 

Parkroyal Darling Harbour, Sydney 

30 - 31 October 2002 

by Tad Watroba - Director, Hancock Prospecting Pty Ltd 

Hancock Prospecting Pty Ltd

Why Investing in Iron Ore Exploration? 

• Why not? 

• Success of Rio Tinto, Tinto, 

BHPB, Robe River and others 

• Benefits to Western Australia and to the nation 

• How has it happened 

• Hard road to Hope Downs 


Benefits to Western Australia and to the nation 

• Development of towns, ports, railways, roads etc 

• Royalties and taxes 

Western Australian Iron Ore Royalty Receipts 

Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 

A$ M 145 151 158 139 153 154 182 235 205 233 286 

• Australian Balance of Payment 

• Jobs, jobs, jobs 


Hancock Group - Summary 

Pioneering Family of the North West: 

•Pastoralists since 1860’s 

•Mineral exploration since early 1930’s 

Lang Hancock ‘father’ of the Pilbara 

discovers vast quantities of iron ore in 1950’s, 

1960’s & 1970’s 

Hancock Prospecting earns mining royalties 

Continued exploration for iron ore and Hancock is 

the only other holder of significant iron ore 

reserves in the Central Pilbara outside Rio Tinto 

and BHPB 


Hancock Group - History 

June 10 1909 Langley George Hancock born in Perth to 

George and Lillian Hancock 

August 4 1947 Langley George Hancock and Hope 

Margaret Nicholas married 

November 22 1952 Discovery flight with wife, Hope 

Hancock, whilst flying from their Nunyerry mine to Perth 

1953 Returning to discovery area, landing in spinifex and 

collecting samples for more than 50 miles and sending to 

Perth for analysis. After analysis, realisation he had found 

an iron ore zone of possible world significance 


Flying Prospector 



1955 Established family company, Hancock Prospecting 

Pty Ltd (HPPL), now run by his daughter Gina Rinehart 

1953 – 1960 Lobbied for lifting of Iron Ore export embargo 

by Federal Government. 

• Continued exploration 

• Established committee for North West development with 

pastoralist friends Frank Thompson and Bill Leslie and proposed 

and lobbied for tax incentives, with the provision that monies be 

reinvested in the North West 

1960 Export embargo on Iron Ore lifted 



1960 – 1961 Lobbied for lifting of State embargo on 

pegging for Iron Ore.Together with partner E.A Wright of 

WPPL, endeavoured to interest Steel Mills and mining 

houses to invest in Hancock’s Pilbara discoveries 

1961 State embargo on pegging of Iron Ore lifted 

1961 Pegging of Iron Ore areas discovered by Lang 

Hancock with team on ground headed by cousin Bill 

Newman 

Hosted the visit of Val Duncan, Chairman of Rio Tinto, 

London, and other Senior Executives 



1961 – 1962 Together with E.A Wright, negotiated 

agreements with Rio Tinto for the purpose of furthering 

development of Hancock’s discoveries 

Hosted the visit of Tom Price of Kaiser Steel, USA, which 

brought in the involvement of Kaiser Steel into what 

became the new company, “Hamersley Iron” 

Increased exploration efforts with Dr Bruno Campana of 

Rio Tinto Australia, and mapping of the entire Hamersley 

Iron Province 

Identified and named “Campana’s Horizon” (also known 

as “Bruno’s Band”) 


Bruno’s Band 



1962 Hosted the visit of Dr Muraoka and staff from 

Marubeni, Japan, utilising Hancock’s “Hamersley 

Station” as headquarters for Marubeni’s, and 

Hancock’s continuing exploration efforts 

The exploration report of Dr Muraoka brought the 

Japanese Steel industry’s interest into the Pilbara 


Dr Muraoka and Lang Hancock 



1963 – 1964 Arranged and hosted the visit of the 

world’s then richest man, Daniel K Ludwig, and 

interested him in presenting a cost saving 

proposal to the West Australian government for 

the building of a large central port and unified 

railway system to service the entire Pilbara Iron 

Ore region, to enhance the region’s 

competitiveness. 

1966 Tom Price commissioned, and Port and town 

of Dampier established 



1966 – 1971 Brought Hamersley Iron Executives to 

Paraburdoo and interested them in developing 

Paraburdoo 

Sought to interest Texasgulf of USA, CSR, MIM, 

Utah, and Consolidated Goldfields into 

participation in Hancock’s and Hanwright’s 

exploration teams 

1969 Established with WPPL the Sunday 

newspaper “The Sunday Independent” 



1970 - 1971 Hanwright explored with the co-operation of 

Mr Hancock’s brothers’ in law Jim and Bill Nicholas, and 

friend Don Rhodes, the West Angelas, which Mr Hancock 

named after E.A. Wright’s daughter, but these areas were 

then confiscated by the West Australian government, and 

later given to a competing company 

1972 HPPL and WPPL established with Texas Gulf the Iron 

Ore (Rhodes Ridge) Agreement with the West Australian 

government 


Rhodes Ridge JV with Texas Golf


1972 HPPL and WPPL established with the Iron Ore 

(Wittenoom) Agreement with the West Australian 

government 

HPPL and WPPL established with MIM, Utah and 

Consolidated Goldfields the Iron Ore (McCameys) 

Agreement with the West Australian government 

1973 Paraburdoo Commenced production 



1974 Established the nationwide “National Miner” 

newspaper 

•Gained jet pilots license at age 65, and acquired first 

Lear Jet and utilised for overseas visits to promote 

Australian mineral developments, and to show 

executives, politicians and others the Pilbara’s 

potential 



1975 Arranged and hosted the visit of close friend, and 

Premier Joh Bjelke-Petersen and party to the Pilbara, and 

promoted the establishment of a railway line across 

Australia linking the Pilbara’s Iron to Queensland’s coking 

coal 

After years of worldwide effort with Marandoo, and 

completing the feasibility study, received “Letter of 

Interest” from Nippon Steel, allowing Nippon Steel to 

participate up to 1/3 in the Marandoo project. 


Premier Joh Bjelke-Petersen Visit 



1979 Wrote and released first book “Wake Up 

Australia” (launched on June 10 by Premier Joh 

Bjelke-Petersen and his daughter Gina, in his 

absence due to ill health) on “Wake Up Australia” 

jumbo jet tour of Australia’s mineral assets and 

potential 


Wake-up Wake up Australia Flight

Wake up Australia Flight


1987 Achieved government support for infrastructure 

sharing for the McCamey’s project by way of a State 

Agreement with BHP to allow third parties to access 

their railway 

1989 - 1991 Achieved first tonnage to be mined at 

McCamey’s Monster, first Hancock’s own iron ore mine 

in production 

1992 March 27 th , passed away unexpectedly, despite 

strong will to live, his daughter Gina Rinehart takes over 

HPPL 


The Man of Iron 



1992 December - HPPL achieved the Iron Ore (Hope 

Downs) Agreement with the state Government 

1993 Mrs Rinehart hosted visit by Premier Mr Richard 

Court, and party to Pilbara 

1993 June 10 th , a new planet, discovered by Dr Candy, 

named in permanent honour of Lang Hancock 

1994 Marandoo commenced production 

1997 Pre-feasibility study for Hope Downs finalised and 

bankable feasibility study commenced 



1998 29 th January announcement of participation of 

Iscor Limited to develop the Hope Downs Iron Ore 

Project with Hancock Prospecting Pty Ltd 

1999 June 10 th Naming of Hancock Range in the Pilbara 

in honour of Lang Hancock and the Hancock family, and 

their pioneering history in the North West region 

2000 Established program with the Notre Dame 

University to commence the Hancock Free enterprise 

lectures 


Hancock Group - Position Today 

Mining 

•Hope Downs 

•Joint Venture Partner in Rhodes Ridge (25%) with Rio Tinto 

•Objective:- to be Australia’s 3rd iron ore producer 

•Other Iron Ore Tenements (East Angelas, Roy Hill, Mulga 

Downs and others) 

•Coal 

•Ferruginous Manganese 

Other Interests 

•Pastoral 

•Property 


Location Map 


Hope Downs Project 

1971 

1985 

1987 

1988 

1991 

Pacminex exploration (19 holes) 

Geological Mapping 

RC drilling programme 

Low level aeromagnetic survey 

100m decline 

Diamond drilling 

Preliminary metallurgy 



1992 

Initiated environmental studies 

30,000m of RC drilling 

730m diamond drilling 

Hope South discovery 

Hope Downs Iron Ore Agreement Act 

1993 

60,000m RC drilling programme 

5 winzes sunk in Hope North & South 

2400m diamond drill core 

Permanent camp established 



1994 

1995 

7 winzes sunk in Hope North & South 

Metallurgical testwork commenced at Ammtec 

Geotechnical studies Hope North & South 

3D interpretation & Orebody Modelling of Hope North 

Mine Planning for Hope North 

3D interpretation & Orebody Modelling of Hope South 

Further metallurgical testwork CISIRI, British Steel 



1996 

Mine Planning for Hope South 

CSIRO and MPL metallurgical testwork 

Marketing Documentation 

1997 

Marketing 

Exploration of Hope 2 and 3 

Continuation of Pre-feasibility Study 

Discussions with Potential Partners 


Hancock and Iscor Agreement for Hope Downs 


Hope Downs Project Status after Signing with Iscor 

Tenements 100% owned by Hancock Group 

Total Delineated resource for Hope Downs 1, 2, 3 and East 

Angelas (Not part of the agreement with Kumba) exceed 

1,200 Mt 

Extensive pre-feasibility work by Hancock had proceeded for 

over 6 years (total spent exceeds $25 M) 

Drilling, geology, mine planning, metallurgy, engineering, 

environmental, native title and heritage studies 

Hope Downs 1 comprises two deposits - North & South with 

scheduled recoverable reserves over 400 Mt 


Hope Downs Feasibility Study Period 

In 1998, the Hancock Group and the Iscor Group began a bankable 

feasibility study of the potential development of the Hope 1 iron ore 

deposit 

Hope Downs Management Services (HDMS) was formed 

to manage the bankable feasibility study (BFS) 

The original Project concept was to: 

• Produce 15 Mt/a of discrete Marra Mamba lump and fines from Hope 

1, and 

• Deliver the ore “on ship” using shared rail and port infrastructure 

In late 2000, the Project concept was revised to: 

• Produce 25 Mt/a of discrete Marra Mamba lump and fines from Hope 

1, and 

• Deliver the ore “on ship” using independent rail and port 

infrastructure 

The FS technical report was completed in July 2002 


Geological Program 

100,000 metres drilling during pre-feasibility 

32,000 metres drilled in feasibility study 

13 exploration shafts sunk (1000 m) 

Representative samples - 1997 and 1999 

Revised Resource model - September 1999 


Geology 

Most iron ore deposits of economic value in the Pilbara were derived by 

enrichment of either the Brockman Iron Formation or the Marra Mamba 

Iron Formation 

Iron ore from the Marra Mamba Iron Formation will be mined at Hope 1 

Hope 1 is made up of 2 orebodies 

• Hope North 

• Hope South 

Hope 

South 

ore 

detritus 

Marra Mamba 

Iron Formation 

Figure 3.5 Diagrammatic cross section of Hope 1 

ore 

detritus 

Wittenoom 

Dolomite 


North 

Hancock Prospecting Pty Ltd 

E 

W

Geology 

At Hope 1, the mineralised zone contains 

three ore-types: 

1. Bedded ore-types, ~80%, mainly HG 

2. Hydrated ore-type,

Geology 

Initially, most of Hope 1 had 

been drilled on a 200 m × 50 m 

grid 

Infill drilling (on a 100 m × 50 m 

grid) was carried out during 

the BFS to: 

• Confirm the structural 

interpretation 

• Confirm the accuracy of 

drilling data 

• Increase confidence in the 

Mineral Resource 

Drilling summary (total) 

• 1552 holes 

• 134 172 m (16% diamond 

drilling) 

Drill rigs operating at Hope 1 


Geology 

Mineral Resource estimate - Hope 1 

Derived from geological cross sections based on drilling 

Consistent with the Australian Code for Reporting Mineral Resources and Ore 

Reserves (Mineral Resource tonnage estimate is inclusive of Ore Reserve tonnage 

estimate) 

Cut-off grade = 58%Fe ; Average in-situ density = 2.8 t/m³ 

Increasing level of 

geological knowledge 

and confidence 

Mineral Resource 

490 Mt, in situ # 

Measured; 195 Mt 

Indicated; 270 Mt 

Inferred; 25 Mt 

# dry, to the nearest 5 Mt 

Fe 

SiO 2 

Al 2 O 3 

P 

Mn 

LOI 

% dry basis 

61.8 

3.0 

1.6 

0.06 

0.1 

6.7 


Sample evaluation 

Bulk sampling (drum sample) programs: 

• A decline (mainly hydrated ore-type) 

• 12 winzes (vertical shafts), maximum 

depth 81 m 

• 8 winzes in Hope North 

• 4 winzes in Hope South 

• A bulk marketing sample was prepared from winze 

material in 1999 

– Represented the first ~110 Mt of ore to be mined 

– Lump ore was conditioned 

• Material recovered from the winzes was also used 

for evaluation of ore processing characteristics 

11 11 11 

Hope Hope North 

North 

12 12 12 

10 10 10 

8 8 8 

1 1 1 

7 7 7 

6 6 6 

Hope Hope South 

South 

2 2 2 

3 3 3 

9 9 9 

12000 E 

Decline 

4 4 4 

5 5 5 

6000 N 

Winze and decline locations at Hope 1 

10000 N 

∀ 


Mining 

Ore Reserve estimate - Hope 1 

Derived from the Mineral Resource estimate (Measured and Indicated categories only) 

Consistent with the Australian Code for Reporting Mineral Resources and Ore 

Reserves (Ore Reserve tonnage estimate is within the Mineral Resource tonnage 

estimate) 

Tonnage and grade estimates include dilution (

Mining 

Mine planning – pit design and operations 

• Hope North is: 

– divided into 4 pits for scheduling 

– ~6000 m long and 500 m wide 

• Hope South is: 

– divided into 3 pits for scheduling 

– ~5000 m long and up to 750 m wide 

Conventional open pit mining operation 

• Horizontal 10 m benches 

SouthWest 

NorthWest 

SouthCentral 

Hope Hope North 

North 

NorthFlatTop 

SouthEast 

Hope Hope South 

South 

12000 E 

NorthEast1 

Marandoo 

∀ 

10000 N 

NorthEast2 

Hope 1 

Mt Whaleback 

6000 N 

∀ 

Definition of pit areas for mine planning 


Mining 

Mine operations – equipment 

Equipment selections were made to: 

• Ensure the required mining 

selectivity 

• Take advantage of the latest 

developments in mining 

technology 

• Standardise the mining fleet 

Table 5-11 Major mining fleet at 25 Mt/a production 

Equipment Proposed size Number 

Blast hole drills 251 mm diameter 4 

Hydraulic excavators 30 m³ bucket 2 

Front End Loaders 16 m³ bucket 2 

Haul trucks 231 t 18 

Mining operations – quality control concept 

• Target product quality will be achieved by: 

– Grade control drilling 

– Maintaining adequate drilled and broken stocks 

– Mining from pits with complementary blending 

grades 

– Using run of mine stockpiles (before primary crusher) 

Komatsu 830E haul truck 


Plant 

Flowsheet and facilities 

Plant design by Fluor Daniel 

Final design production rate = 25 Mt/a 

(dry) 

Two stage crushing and screening 

plant to produce separate lump 

(-31.5+6.3 mm) and fines (-6.3 mm) 

products at Hope 1 

Construction will proceed in 2 

phases: 

Phase 1: initial design production 

rate of 15 Mt/a 

Phase 2: additional production 

capacity of 10 Mt/a 


South 

overland 

conveyor 


North 

 

 

fines 

lump 

primary 

crushing 

module 

secondary 

crushing 

modules 

Phase 1; +15 Mt/a 

Phase 2; +10 Mt/a 

scalping 

modules 

product 

screening 

modules 

∀ 

Schematic outline of ore processing plant 

Hancock Prospecting Pty Ltd 

25 Mt/a

Plant 

Mine stockyard 

The mine stockyard will be located 

inside the rail loop 

Stockyard capacity will be 600 000 t 

(live) 

Each live stockpile has sufficient ore 

to fill 2 trains, each of 224 ore cars 

Train 

loadout 

Overland conveyor 

(from Hope South) 

∀ 

Ore 

processing 

plant 

Rail loop 

Schematic outline of mine stockpiles and train loadout 

Train loading and infrastructure 

Train loading 

• Proposed system used successfully at 

other Pilbara operations 

• Designed to load 224 ore cars with up 

to 125 t per ore car in a total time of 3 

hours 

Infrastructure 

• Stand-alone services 

• Appropriate to a fly-in / fly out 

operation 


Feasibility Study Results – Mining and Ore Processing 

Mineral Resources . . . . 490 Mt at 61.8%Fe 

Ore Reserves . . . . . . . . 400 Mt at 61.6%Fe 

Waste : Ore ratio . . . . . 1.4 : 1.0 

Mining method . . . . . . . Open-cut; drill, blast, load & 

haul 

Production ramp-up . . 5 Mt/a steps to 25 Mt/a by Year 5 

Ore processing plant . . Dry, 2 stage crushing and 

screening 

Products . . . . . . . . . . . .47% lump, 53% fines at mine 

Approvals . . . . . . . . . . .Secured 


Product quality projections 

Projections of physical 

properties have been 

made based on: 

• Results from testwork 

carried out on the 

composite lump and 

fines prepared during 

the BFS 

• Simulation of the 

mine to port handling 

and transportation 

process 

Table 9-5 Projected physical properties (at port) 

Test Typical value 

Bulk density (uncompacted, dry) 

Lump, kg/m³ 1850 

Fines, kg/m³ 2050 

Tumble Strength ISO 3271 

Tumble Index; TI, %+6.3 mm 86 

Abrasion Index; AI, %-0.5 mm 8 

Decrepitation ISO 8371 

Decrepitation Index; DI, %-6.3 mm 5 

Reduction Disintegration ISO 4696-1 

LTB, %+6.3 mm 60 

LTB, %-3.15 mm 22 

Reducibility ISO 4695 

(dR/dt) 40, %/min 1.24 

65% reduction time, min 50 


Iron Making Slag Rate Index comparison 

The slag rate index of Hope 1 lump is: 

* ~5% lower than Brockman lump 

The slag rate index of Hope 1 fines is: 

* ~15% lower than Hamersley and Yandi fines 

* ~25% lower than Mt Newman fines 

* ~55% lower than Mesa J fines 


Infrastructure - Rail 

 

N 

0 100 

km 

Port 

Hedland 

BHP Yandi 

Hope 1 • 

Mt Whaleback 

Jimblebar 

New heavy-haul railway 

from Hope 1 to Port 

Hedland 

Designed as an 

independent operation 

Total length ~370 km 

3 passing sidings 

required for a capacity of 

25 Mt/a 


Railway 

Height, mRL 

800 

600 

400 

200 

0 

Passing 

siding 1 

Chichester 

Range 

Passing 

siding 2 

0 40 80 120 160 200 240 280 320 360 

Port Hedland Distance, km 

Hope 1 

Schematic long section of proposed railway 

Passing 

siding 3 

Hancock 

Range 


Port 

Hope 1 ore exports through Port Hedland 

New ore handling & ship loading facilities designed 

HDMS has lease options over land on the western side of 

Port Hedland harbour and a new berth site at Harriet Point 

Finucane Island berth (BHPBIO) 

N S 

W 

Aerial view of Port Hedland harbour, looking E 

E 

Nelson Point berths (BHPBIO) 

Harriet Point 


Port 

The port materials handling system will be 

developed in 2 stages: 

• Stage 1: initial capacity = 15 Mt/a 

• Stage 2: to increase capacity to 25 

Mt/a 

The system will comprise: 

• Train unloading facilities (twin cell 

dumper) 

• An in-loading circuit 

• ore stacking (capacity = 10 000 

t/h) 

• stockpiling (capacity = 4.1 Mt at 

Stage 2) 

• An out-loading circuit 

• ore reclaiming (capacity = 10 000 

t/h) 

• lump rescreening (up to 9 

screens at Stage 2) 

• A fines-return circuit and bulking in 

circuit 

Car dumper 

• Product sampling facilities 

Lump rescreening plant 

Stage 1; +15 Mt/a 

Stage 2; +10 Mt/a 

Total; 25 Mt/a 

Schematic outline of port materials handling system

Feasibility Study - Consultants 

Geological Modeling - Snowdens 

Hydro-geology - Aquaterra 

Mine Design & Scheduling - Snowdens 

Process Plant - Fluor Daniel 

Rail - HGM/ Fluor Daniel 

Materials Handling - Fluor Daniel 

Marine - HGM 

Environmental - Biota

Iron Ore Market Outlook - Demand 

Further 

consolidation 

amongst steel 

makers 

China to rely more 

on imported iron ore 

Consumers focusing 

on consistent, high 

quality, raw 

materials 

Mt 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

Iron ore imports by China 

(historic and forecast) 

~155 Mt 

1985 1990 1995 2000 2005 2010 2015 

Year 


Iron Ore Market Outlook - Supply 

Consolidation of 

iron ore supply; 

completed? 

Continued growth 

in seaborne iron 

ore trade 

High quality lump 

ore supplies are 

limited 

Mt 

600 

500 

400 

300 

200 

100 

0 

Seaborne iron ore trade 

1985 1990 1995 2000 2005 2010 

Year 


Iron Ore Market Outlook – Hope Downs 

Strong formal 

support for the 

Project from 

China 

HDMS is working 

to secure formal 

support from 

other markets 

Proposed sales - by market 

Europe 

15% 

Other Asia 

10% 

China 

50% 

Japan 

25% 


Financing Options 

Kumba Resources Ltd 

• Public listing on JSE (October 2001) 

Equity Investor/s 

Conventional Project Finance 

• Strong market support 

• Sound engineering design 

• Competent managers 

Mining Contractor 

Infrastructure Outsourcing 

• Infrastructure Funds 

• Rail & Port investors 


Ownership Structure: Joint Venture stage 

Hancock Kumba 

Hope Downs 

Joint Venture 

Equity 

Investors 


Project Development Schedule 

Feasibility Report completed . . . . . . February 2002 

Letters of Intent/sales contracts . . . . 4th Quarter 2002 

Government approvals . . . . . . . . . December 2003 

Construction commences . . . . . . . . January 2004 

Shipments to customers commence . . 2nd Quarter 2006 


Why Not? - That Why 

WA IRON ORE PRODUCTION AND DESTINATION - 2001 

Mine Domestic Japan China Korea Taiwan Europe Other Total 

HI operations - 19.0 12.6 10.3 4.4 4.0 0.6 50.9 

Channar - - 9.7 - - - - 9.7 

Newman 3.2 11.2 7.7 3.1 2.7 2.5 - 30.4 

Goldsworthy 2.5 3.5 0.8 - 0.5 - - 7.3 

BHP Yandi 1.5 14.6 3.0 8.1 2.0 1.6 - 30.8 

Robe River 0.4 17.2 1.0 1.4 - 7.9 0.4 28.3 

Koolyanbobbing 0.1 - 3.2 - - - - 3.3 

Cockatoo Island - - 1.2 - - - - 1.2 

Total by 

destination 

7.7 65.5 39.2 22.9 9.6 16.0 1.0 162.0 


Why Not? - That Why 

COMMITTED OR POSSIBLE NEW IRON ORE PROJECTS IN WESTERN AUSTRALIA 

Mine Expected Production Destination Expected Start-up 

West Angelas 20Mt/a East Asia July 2002 

Mining Area C 15Mt/a Korea 2003 

Eastern & Western Ranges 

and Paraburdoo 

20Mt/a China 2004 

Hope Downs 25Mt/a East Asia 2006 

Portman Expansion An extra 5Mt/a China 2006 

BHP Billiton’s Yandi An extra 5Mt/a short term East Asia 2003 

Nammuldi/Silvergrass An extra 3Mt/a short term East Asia 2007 

Mount Gibson 1.5Mt/a East Asia 2003 

Yandicoogina expansion An extra 3Mt/a East Asia 2007 

TOTAL 97.5Mt/a

Hope Downs and Beyond Presentation to Australian Iron Ore and

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