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Low Opex Potential at Gabon DSO Iron Ore Project – Desktop Order of Magnitude Study
Ferrex plc, the AIM quoted iron ore and manganese development company focused in Africa, has said that a desktop study for operations and associated costs has highlighted that significant potential exists for low operating costs at its 309 sq km Mebaga direct shipping ore iron ore project in northern Gabon.
Overview:
· Two operational scenarios – 1mtpa (Scenario A) and 3mtpa (Scenario B) of DSO iron ore (‘Fe’) included as part of desktop order of magnitude study
· Free On Board, DSO cost of $41/t Fe for Scenario B, and FOB DSO cost of $45/t Fe for Scenario A
· Cost, Insurance & Freight China, DSO cost of $61/t using current freight rates for Scenario B and $65/t for Scenario A
· Independent marketing agents have confirmed that the DSO material should command premium over 62% Fe benchmark price currently at $95/t CIF China
· Significant benefits as the closest DSO project to the Libreville port in the Belinga Super Group areaand route to Libreville Port will utilise a large amount of existing infrastructure
Ferrex Managing Director Mr. Dave Reeves said, “We are very encouraged by the results of this desktop study which, with a FOB cost of between $41/t and $45/t for both operational scenarios, demonstrates the significant potential for low operating costs at Mebaga. Importantly independent marketing agents have confirmed that Mebaga’s ore, which has low levels of silica, alumina and phosphorous, should be sold at a premium to the 62% iron benchmark price. When the low capex estimations are coupled with a premium benchmark DSO price and the fact that we will utilise a large amount of existing infrastructure, the potential returns for Mebaga look very exciting.
“We are now focussed on closing a new funding option for the project and intend to commence drilling in the next dry season December 2014/ January 2015. This drill programme will be followed by a more in-depth Scoping Study that will investigate the operating costs in more detail and define the capital costs associated with the project. We look forward to reporting on these developments in due course.”
The deposit outcrops on an elevated ridgeline and hence will have a low strip ratio. It is expected that all material will require light blasting to ensure adequate fragmentation for material movement.
It is envisaged that the mining will be undertaken by an independent contractor who will provide the mining fleet required for the operation. Costs for the mining have been based on the recent tenders for Ferrex at its manganese project in Togo and the recent costs published by other operators and developers in the region. Based on a strip ratio of 1:1, which has been estimated from the drilled area to date at Mebaga, this results in a mining cost of $8.00 per tonne of run-of mine (‘ROM’) ore delivered.
