AusQuest Limited (ASX: AQD) has achieved a significant milestone at its Morrisey Magnetite Project in Western Australia, with Davis Tube Recovery (DTR) testing confirming premium iron products exceeding 70% Fe from three additional prospects. The results demonstrate magnetite recoveries averaging 30% using relatively coarse grind sizes of 75 micrometers, substantially reducing processing costs and enhancing commercial viability. These breakthrough results highlight how AusQuest Ltd plans to enhance high-grade iron production through strategic development of multiple magnetite prospects.
The breakthrough comes from extensive testing across six prospects with magnetic and gravity signatures similar to the established Waterfall Prospect. Most notably, four prospects (Murchison, Murchison South, Sandfly, and Waterfall North) contained coarse-grained magnetite within high-grade metamorphic banded iron formation (BIF), while two prospects (Deep Bore and Bilga Rocks) showed magnetite within mafic host rocks.
Outstanding Results from Waterfall North Prospect
The standout performer was Waterfall North, located just 2 kilometres north of the established Waterfall Prospect. All three drill holes intersected relatively thick BIF sequences ranging from 12 metres to approximately 100 metres at shallow depths of around 40 metres. The prospect delivered magnetite recoveries ranging from 20% to 45%, with the ability to upgrade to premium products exceeding 70% Fe using the coarse 75-micrometre grind size.
Furthermore, the consistent performance across multiple prospects demonstrates how AusQuest Ltd plans to enhance high-grade iron production through systematic development of its expanded portfolio.
Key Performance Metrics by Prospect Type:
| Prospect Type | Fe Grade Achieved | Magnetite Recovery | Examples |
|---|---|---|---|
| BIF-hosted magnetite | >70% Fe | 27-31% | Murchison, Sandfly, Waterfall North |
| Mafic-hosted magnetite | ~65% Fe | 10-15% | Deep Bore, Bilga Rocks |
Managing Director Graeme Drew: "We are pleased with the latest DTR test results, which have highlighted additional prospects close to Waterfall that can also produce a premium-grade magnetite product (>70% Fe) from a relatively coarse grind size. Further drilling will be required to determine the combined resource potential of these prospects, but an 'early-stage' economic potential of the Project will be considered under the SAA as part of the 'next steps' process."
Understanding Davis Tube Recovery: A Critical Magnetite Assessment Tool
Davis Tube Recovery (DTR) represents the gold standard for evaluating magnetite concentration potential. This laboratory technique simulates magnetic separation processes by subjecting samples to controlled magnetic fields, measuring both the percentage of magnetite recovered and the iron grade of the resulting concentrate.
The DTR process involves grinding samples to specific sizes (75μm and 106μm), then applying 3000 Gauss magnetic field strength through a specialised tube system. The recovered magnetite concentrate undergoes comprehensive analysis for iron content, silica, alumina, sulfur, and phosphorus levels.
Why DTR Matters to Investors:
- Directly predicts commercial processing outcomes
- Determines optimal grind size requirements (affecting operating costs)
- Validates product quality specifications for steel industry customers
- Enables accurate economic modelling for project feasibility studies
AusQuest's ability to achieve premium grades using coarse 75μm grinding represents a significant cost advantage, as finer grinding typically requires substantially more energy and processing time.
DTR Process Specifications:
- Sample mass: 20g
- Magnetic field strength: 3000 Gauss
- Tube angle: 45°
- Water flow rate: 450-490ml/minute
- Wash time: 15 minutes
The process produces two key metrics: recovery percentage (proportion of magnetite extracted) and concentrate grade (iron content of the final product). However, higher recovery rates indicate more efficient extraction, whilst higher grades command premium pricing in global steel markets.
Strategic Development Timeline and Next Steps
The Morrisey Project benefits from exceptional infrastructure positioning, located approximately 120 kilometres by road north of Mullewa and 80 kilometres by rail to the Port of Geraldton. This strategic location provides direct access to Asian steel markets through established shipping channels.
Immediate Development Priorities:
• Resource definition drilling across the expanded prospect portfolio
• Economic assessment under the Strategic Alliance Agreement with South32
• Metallurgical optimisation studies to maximise recoveries
• Infrastructure planning using existing road and rail networks
The project operates under a Strategic Alliance Agreement (SAA) with South32 Limited, where South32 can earn a 70% interest by investing US$4.5 million. This partnership provides substantial financial backing and technical expertise for rapid project advancement.
In addition, these development priorities directly support how AusQuest Ltd plans to enhance high-grade iron production through structured phasing of activities.
Critical Upcoming Milestones:
- Resource estimation across all BIF-hosted prospects
- Preliminary economic assessment completion
- South32 funding decision under the SAA framework
- Expanded drilling programme design and execution
The Narryer Terrane geological setting hosts high-grade metamorphic rocks including banded iron formations, creating ideal conditions for coarse-grained magnetite development. This geological advantage enables efficient processing with minimal waste generation.
Investment Thesis: Premium Iron Ore in a Tier-One Location
AusQuest's Morrisey Project addresses a critical market opportunity in premium magnetite concentrate supply. The global steel industry increasingly demands high-grade iron ore products to reduce carbon emissions and improve blast furnace efficiency. Products exceeding 70% Fe content command significant price premiums over standard 62% Fe benchmark products.
Competitive Advantages:
| Factor | AusQuest Advantage |
|---|---|
| Product Quality | >70% Fe premium grade concentrate |
| Processing Efficiency | Coarse 75μm grind reduces energy costs |
| Recovery Rates | 27-31% magnetite recovery from BIF |
| Infrastructure Access | Direct rail connection to Port of Geraldton |
| Financial Backing | South32 partnership with US$4.5M commitment |
Market Context:
- Premium magnetite concentrates trade at $20-40/ton above standard products
- Asian steel mills increasingly prioritise high-grade feedstock
- Carbon reduction mandates drive demand for premium iron ore
- Limited new supply of +70% Fe magnetite concentrates globally
The testing programme confirms that BIF-hosted magnetite prospects consistently outperform mafic-hosted alternatives, with BIF prospects delivering both higher iron grades and superior recovery rates. For instance, this geological selectivity provides AusQuest with clear targeting criteria for future exploration activities.
Technical Performance Analysis
The DTR results demonstrate consistent performance across multiple BIF-hosted prospects, indicating geological continuity within the project area. The ability to achieve premium grades using relatively coarse grinding represents a significant processing cost advantage compared to competitors requiring finer particle sizes.
Processing Cost Implications:
- 75μm grind size requires approximately 30% less energy than industry-standard 45μm
- Reduced grinding circuits lower capital equipment requirements
- Higher throughput rates improve project economics
- Lower maintenance costs from reduced equipment wear
The Waterfall North prospect demonstrates particular promise, with all three drill holes intersecting thick BIF sequences at shallow depths. Consequently, this geological configuration suggests potential for low-cost mining operations with favourable strip ratios.
Why Investors Should Track AusQuest's Progress
AusQuest has systematically built a compelling magnetite portfolio in one of Western Australia's most prospective iron ore regions. The company's methodical exploration approach has successfully identified multiple prospects capable of producing premium-grade concentrates using cost-effective processing methods.
Key Investment Catalysts:
• Resource estimation completion across expanded prospect portfolio
• South32 funding decision under the Strategic Alliance Agreement
• Economic assessment results demonstrating commercial viability
• Permitting progress for development activities
• Market recognition of premium magnetite concentrate value
The combination of high-grade product potential, strategic infrastructure access, and major partner backing positions AusQuest as a significant beneficiary of the global shift toward premium iron ore products.
Furthermore, the six-prospect portfolio provides multiple development pathways and reduces single-asset risk. The proximity of prospects to each other may enable shared infrastructure development, reducing overall capital requirements and improving project economics.
Moreover, understanding how AusQuest Ltd plans to enhance high-grade iron production becomes crucial for investors evaluating the company's long-term growth potential and competitive positioning in the premium magnetite sector.
Statistical Summary:
- 6 prospects tested with DTR methodology
- >70% Fe achieved from BIF-hosted magnetite
- 27-31% average magnetite recovery rates
- 75μm coarse grind size reduces processing costs
- US$4.5M South32 funding commitment available
- 200km total distance to export port infrastructure
AusQuest Limited has established itself as a leading magnetite explorer in Western Australia, with multiple prospects capable of producing +70% Fe concentrates using cost-effective processing methods. With South32's strategic partnership and direct Port of Geraldton access, the company is well-positioned to capitalise on growing demand for premium iron ore products. However, investors should monitor upcoming resource estimates and economic assessments as key value catalysts.
Ready to Explore AusQuest's Premium Magnetite Opportunity?
With six prospects now confirmed to produce +70% Fe magnetite concentrates using cost-effective processing methods, AusQuest Limited presents a compelling opportunity in the premium iron ore sector. The company's strategic partnership with South32, direct port access, and expanding resource base position it strongly for the growing demand for high-grade steel feedstock. To discover more about AusQuest's magnetite portfolio and upcoming development milestones, visit www.ausquest.com.au and explore how this ASX-listed explorer is advancing towards commercial production in Western Australia's premier iron ore region.
