EDITOR: | February 4th, 2016 | 11 Comments

Ecclestone on the Iranian Mining Market: Potential “Huge”

| February 04, 2016 | 11 Comments
image_pdfimage_print

Iran_MKTAs emerging markets go the last great unopened can of beans is Iran. With the removal of international sanctions on trade and investment the rush will be on to get positioned in Iran’s mining scene. Sure small emerging markets appear from time to time but Iran is a very large economy with enormous export revenues from oil, a highly prospective geological profile and a large and rather well-educated population.

In this piece I shall give a review of the mining activity at the current time and its potential to grow.

Mineral Treasure Chest

Despite being “beyond the pale” the USGS nevertheless continued to produce reports on the Iranian mineralogical scene. In its latest report (2012) it stated that more than 40 mineral commodities were mined and about 20 metals or mineral-related commodities were refined or manufactured in Iran. The country was estimated to account for about 9% of the world’s output of gypsum and pumice; more than 2% of the world’s output of barite, feldspar, and sulphur; and more than 1% of the world’s output of cement, industrial (or glass) sand, molybdenum, and nitrogen.

Mines are not many and most are state-owned. Briefly last decade an opening of the economy had some foreign miners (the now defunct Union Resources from Australia and Zarcan from Canada) doing work in the country but then international politics intervened and those ground to a halt. Union though were rather advanced with a very sizeable Lead-Zinc deposit, of which more anon.

Recently at an LME Week event in London I came across a New York investment banker that had thrown it all in and relocated to Teheran to launch a Magnesite mining and processing operation.

A key body in mining is Iranian Mines & Mining Industries Development & Renovation, known as IMIDRO, is a major state-owned holding company active in the mining sector in Iran.

The state-owned enterprise that is central to the country’s base mining endeavours is National Iranian Copper Industries Co. (NICICO) which was based upon the nationalized assets of Anaconda Copper after the Revolution . The company’s remit includes extraction and development of copper mines, production of copper concentrates and manufacturing copper products such as cathodes, slabs, billets and 8 mm wire rods. The most significant copper mines in the country, Sarcheshmeh and Meduk mines in Kerman province and Sunegoon mine in eastern Azerbaijan province, are under its control.

At the Heart of the Tethyan Belt

The geology and especially the tectonic style of Iran is highly influenced by the development and history of the Tethyan region. The tectonic events, which occurred around the Iranian Plate margins, are related to rifting processes of Gondwana and subsequent collision with the Arabian plate from the WSW.

Iran_mineral_map

Copper and Molybdenum

In October of 2012 the Iranian government banned the export of molybdenum concentrate (and 50 other products). In prior years, NICICO had exported about 50% of produced molybdenum concentrate.

NICICO is recent years has embarked upon an expansion of the Khatoonabad copper smelter, an expansion of the Meduk copper concentrator, and an expansion of the Sarcheshmeh copper concentrator. There were also plans for the development of a new copper and molybdenum concentrator at the planned Now Chun Mine in Kerman Province.

Iron Ore

Another state enterprise, National Iranian Steel Co. (NISCO) is dominant in this space. The USGS reported that in 2012, it inaugurated the Zarand iron ore concentrator with a capacity of two million metric tonnes per annum. This was built by China Nonferrous Metal Industry’s Foreign Engineering and Construction Company, Ltd. Also in 2012, a 300,000-t/yr-capacity iron ore concentrator was commissioned in Yazd Province and Outotec was awarded a contract to design a 5 million tonnes per annum iron ore pelletizing plant in Kerman Province.

Zinc

Zinc has the potential to be big with the Mehdiabad project being of a size which would have a Vancouver promoted chirping out the tired phrase “world-class”. In our language, big should suffice.

IranMetal

Mehdiabad

In September of 2012, Mehdiabad Zinc Co., entered into an agreement with IMIDRO that would allow Mehdiabad Zinc to develop the Mehdiabad project.

The proposed mining project was expected to operate for 25 years, with a negotiated maximum mine production capacity of 100,000 tpa of zinc concentrate. Mehdiabad Zinc also was authorized to build an associated zinc smelter with a capacity to produce 100,000 tpa of zinc ingot. The project had been on care-and-maintenance status since 2006 owing to a dispute between IMIDRO and Mehdiabad Zinc.

At the time USGS reported that the Mehdiabad Zinc Co. was owned by:

  • Karoun Dez Dasht (45.6% equity interest)
  • Itok GmbH of Austria (24.5% interest)
  • UCL Resources Ltd. of Australia (the former Union Resources with a 24.5% interest)
  • Minority shareholders (5.4% interest)

However UCL appears now to be involved in phosphate exploration in Namibia, so may very well be out of the picture here.

Angouran

The Angouran nonsulfide Zn–Pb VMS type deposit is located about 300 km NW of Teheran, and 120 km W of Zenjan. The deposit is worked from an open pit (the largest one in Iran). It is one of the major zinc producers in Iran. The main ore is smithsonite with a fine-grained sulfide ore that is massive, replacive and often brecciated.

The deposit has resources estimated at about 18 million tonnes at 28% Zn, mainly in the form of the Zn carbonate smithsonite. We had to do a double-take on the truly stunning Zinc grade so tracked down an academic study that referred to the unusually high-grade hypogene zinc ore at Angouran as grading 40.4% Zn, 1.9% Pb in the sulfide ore and 28.1% Zn, 4.4% Pb in the carbonate ore with 110 g/t Ag. The study posited that this deposit was formed from initially highly saline, reduced, relatively acid hydrothermal brine at two successive sulfide and carbonate ore stages.

Meduk

The Meduk porphyry copper deposit is located 45 km northeast of Shahr-e-Babak city. The deposit is hosted by Eocene andesitic and basaltic rocks, changing sequentially to conformable south dipping Eocene red tuffs and tuffaceous sediments, trachyandesite and trachybasalts, trachyandesitic and trachybasaltic lava flows and porphyrites to the southwest. The Cu-mineralization and associated hydrothermal alteration zones are focused on the Miocene dioritic Meiduk porphyry and Eocene andesitic rocks.

Meduk_mine

Sungun

This is a Copper/Moly mine. And contains a resource of 860 million tonnes @ 0.6% Cu. In 2012, NICICO opened a molybdenum concentrator at the Sungun copper complex, which was located in East Azerbaijan Province. The plant was designed to produce 3,000 metric tpa of molybdenum concentrate.

Sungun_mine

Agh-Darreh

The Agh Darreh Gold Project is a 40 square kilometre concession near the village of Agh Darreh about 40 km from the city of Takab, West Azerbaijan Province in north-west Iran. The mining license for the concession at last we could determine was held by Pouya Zarcan Agh Darreh Company’, a  joint venture company under Iranian commercial law, in which Zarcan Minerals (a sometime CVE-listed entity, ticker ZRI)  had directly and indirectly an interest of 58%. Importantly, PZA was, at last report,  in receipt of the permit for the construction of the mining and processing  facilities from the Iranian authorities.

A report by Christian Staargaard, a Vancouver geologist, had confirmed a total resource of 546,000 ounces of gold (297,000 ounces indicated, 249,000 inferred) from 5,000,000 tonnes of ore grading on average 3.4 grams per tonne gold. The report stated in none-too-modest Vancouver-speak that  “the potential to  expand this resource must be regarded as excellent”.

The fate of Zarcan though remains unknown to us.

Sarcheshmeh

The Sarcheshmeh Copper Complex is a large open cast copper mine in the Kerman Province of Iran, considered to be the second largest copper deposit worldwide. Also containing substantial amounts of molybdenum, gold and other rare metals.

The Sarcheshmeh Copper Complex is located 65 km southwest of Kerman and 50 km south of Rafsanjan. The region’s altitude averages about 2600m, the highest spot of which approximates 3000m. The Sarcheshmeh ore bodies, situated in the central part of Zagros ranges, consist of folded and faulted early tertiary volcano-sedimentary rocks.

The Sarcheshmeh mine was begun in 1972 and managed by the Anaconda Group up until the 1979 revolution. The entity formed the basis for the broader NICICO conglomerate.

sarcheshmeh

Design and construction of the processing plant was done by Parsons-Jurden of the US. The complex consists of the mine itself, concentrator, smelter, refinery, foundries and leaching.

According to NICICO’s website the total Sarcheshmeh ore reserve is about 1.2 billion tons of sulfide ore at the grade of 0.7% Cu.

Conclusion

Real, new frontiers in the mining investment space are few and far between. We could claim that Lesotho or Laos are opening up, but who cares? Recently we highlighted Cuba’s potential and now Iran is reappearing from behind an Iron Curtain (or Veil, as the case may be) after a long period of being out of bounds or “too difficult”. Iran has the potential to not only be big but to be “huge” and we are not usually indulging in hyperbole.

The mining potential is clearly there. Both Australians and Canadians have dabbled without getting to production before. Now clearly seems to be a moment when it might be worth reentering the waters, at least cautiously.


InvestorIntel

Editor:

InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.


Copyright © 2017 InvestorIntel Corp. All rights reserved. More & Disclaimer »


Comments

  • Christopher Ecclestone

    Reuters have reported that State-owned Indian firm KIOCL may invest an initial $59 million to build an iron ore pellet complex in Iran, with the objective of offering cheaper supplies of the processed material to Iranian steel mills.

    The company is also negotiating the sale of more than two million tonnes of seaborne to the Gulf country now free from trade sanctions.

    http://www.mining.com/india-mulls-key-investment-to-set-iron-ore-plants-in-iran/?utm_source=digest-en-mining-160203&utm_medium=email&utm_campaign=digest

    February 5, 2016 - 8:39 AM

  • Sara

    For detailed insight, check out Mining Report by Morra Capital http://www.morracapital.com/insight/blog/iran-invest-in-mining

    February 6, 2016 - 3:04 AM

  • Harold Clifford

    A timely introduction and overview for investors with an eye on new areas of opportunity in the global minerals industry.
    When the inevitable news of companies considering Iranian ventures unfolds, I will now have at least a “feel” for the region and its potential.
    Thanks Christopher
    Regards,

    Harold
    Toronto

    February 6, 2016 - 11:38 AM

  • Bahman Rashidi

    Just some comment to improve this post:
    -There are more than 5000 active mines in Iran which most of them owned by private sector but in term of production they are much less than state’s mines
    – Riotinto and Persian gold were other foreign miners in Iran in last decade in addition of Anglo gold and Normandy who had presence later than that
    – The largest open pit mine in Iran is Sarcheshmeh not Angoran
    – Zarshuran (150MT @ 6.9 g/t Au) and Sarigunay ( 52MT @ 1.7 g/t Au) gold mines should be mention

    February 6, 2016 - 7:16 PM

  • Christopher Ecclestone

    Great.. Thanks for the extra data… I hope to formulate a fuller picture over time as information is thin.

    Intriguingly I manage the Antimony Mining & Processing Group on linkedin and have noticed that the LARGEST group by nationality of members is Iranian geologists and yet I have never heard of anything in relation to Antimony there. As Turkey has a lot of Sb, I wonder whether Sb too must be available in Iran.

    February 7, 2016 - 7:20 AM

  • Christopher Ecclestone

    Some investigation of Persian Gold PLC shows that it was AIM-listed and was converted into Clontarf Energy in 2011. I found some old reports though an they say: “In early 2004, Persian Gold negotiated a study concession over 1800 sq kms of ground in the Takestan area of Northwestern Iran. The area holds the second largest known deposits of alunite in the world; in total about 1 billion tons. The ground was selected using satellite imagery and analysis plus the advice and help of the
    Iranian Geological Survey. The concession area which stretches from 120kms Northwest of Tehran toward the Caspian Sea is mainly in the foothills of the Alborz mountains though some areas are deep in the mountains. Access is generally good. It is possible to work in the field for 10 months of the year. Thick snow covers part of the mountains for February and March.

    We put together excellent teams of local geologists and field crews and began our fieldwork in November 2004. Since that time approximately 2,500 rock chip geochemical samples have been taken over the concession area. These samples have been analyzed and a number of gold anomalies have been identified. We have now moved to the second phase of exploration by applying for 8 exploration licences covering a total of 320 sq km of ground. Our teams have been active on follow-up exploration on two of the identified areas, Twin Hills near the town of Takestan and Zehabad a more remote area to the North”.

    February 7, 2016 - 7:34 AM

  • Christopher Ecclestone

    And in 2008 they reported:

    “Dalli

    The current focus of activity is at Dalli, located some 200km southwest of Tehran, where a second stage drilling programme has been finalised. In total 8 holes have been drilled to a total depth of 2,494m, as well as 16 trenches covering 1,513m from which 2,030 samples were collected and sent for analysis.

    We now believe there to be two orebodies at Dalli, the North and South Hills, separated by 1.7km. The indications are that the North Hill is predominantly a gold deposit while the South is a copper/gold porphyry. The first phase drilling on the North Hill produced marginally economic grades so it was decided to focus on the South Hill where the second stage drilling took place. Results are not yet available but visual inspection of the drill core combined with the assay results of the earlier drilling suggests that the grades of copper and gold could be quite variable within the mineralised orebody. The style and grade of mineralisation at South Hill is significant and warrants a regional search of the surrounding area to identify similar systems. This study will use Aster interpretation, rock sampling, soil geochemistry and surface IP geophysical survey.

    Chah-e-Zard

    The Chah-e-Zard prospect is located 550km southeast of Tehran. Results from phase 1 trenching and drilling led to a second phase of shallow drilling focused on the Southern lobe of the sampled area. To date, 38 holes, totalling 4,150m have been drilled and 38 trenches totalling 3,545m dug. Almost 3,000 drill core samples and 1,409 trench samples were analysed. All of the surface and drill hole data was put into a three dimensional model covering the Southern lobe to determine the near surface resources of gold and silver. The model indicates 160,000 ounces of gold and 1 million ounces of silver. It must be emphasised that this estimate is only near surface Southern lobe. An early stage scoping study suggests that an open cast heap leach operation may be economic. With our local 30 per cent partner, we have applied for, and await, a Discovery Certificate before initiating a pre-feasibility study.

    It is important to note that the project outlined above relates to a small portion of the 750m by 1.25km mineralised zone previously identified by extensive soil sampling. The potential at depth over the entire area remains open”.

    February 7, 2016 - 7:38 AM

  • chelsea

    hack

    February 8, 2016 - 9:56 AM

  • Cyrus Arman

    The report has for the most part reached the right conclusions for which I congratulate Christopher; some figures must be improved; also mineral and metallurgical industries of Iran which have grown tremendously in the past years deserves more details.

    February 13, 2016 - 6:27 PM

  • John

    Why is USGS beyond the pale? Not sure I understand what you mean.

    May 12, 2016 - 3:31 PM

  • Christopher Ecclestone

    The original meaning beyond “beyond the jurisdiction”… can you imagine a USGS official turning up at Tehran airport and being asked what he does…?

    It raises a wider issue though because the USGS (which I enormously respect) does have to rely upon jungle telegraph for quite a bit of its information on places that are off-limits politically, and in some metals where disinformation is more common that true information (e.g. Antimony in China, Tantalum production in Africa) and those where smuggling is a key component of trade flows.

    May 13, 2016 - 3:29 AM

Leave a Reply

Your email address will not be published. Required fields are marked *