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So, how did they do?
Sable Mining Africa Ltd, the AIM listed iron ore exploration and development company, has presented its results for the year ended 31 March 2014.
Highlights
· Focus on the high grade, high margin, low capex Nimba Iron Ore Project in south-east Guinée
· Nimba distinguished as one of the largest undeveloped on, or near-rail Direct Shipping Ore (‘DSO’) projects to be held outside the major mining companies in West Africa
· Maiden JORC Reserve of 53.96 million tonnes (‘Mt’) at a grade of 61.6% iron (‘Fe’), a mineral resource of 181.8Mt at an in-situ grade of 58.8% Fe and a total exploration target of 200Mt
· Preliminary Feasibility Study (‘PFS’) confirmed commercial viability of Nimba – comparatively low capex of US$299.3 million (including US$39.7 million contingency) projected
· PFS based on a 3Mt per annum steady production rate over a mine life of in excess of 25 years (based on current Resource)
· High grade DSO and Low Deleterious Elements – only a simple crush and screen process will be required in the early years of production
· Significant Resource upside potential – current Exploration Target of 200Mt over Plateaux 2 & 3, Plateaux 1 yet to be drilled
· Willingness of local governments to support development of Nimba demonstrated by:
o Grant of Export Decree and Mining Licence granted by the Government of the Republic of Guinée
o Memorandum of Understanding with Government of Liberia regarding infrastructure – existing nearby standard gauge railway approximately 26km away, linking the region to the major Liberian port of Buchanan
· Clear pathway to production – Bankable Feasibility Study targeted for H1 2015
Chairman’s Statement:
It gives me great pleasure to write my inaugural Chairman’s Statement to shareholders, following my appointment in January 2014.
Firstly, I would like to take this opportunity to explain why Sable Mining attracted me to its helm. To clarify this, and as a précis to my background, I have spent the past many years evaluating iron ore assets and opportunities across the world, to come across an undeveloped asset of Nimba’s quality, with proximal rail infrastructure, Sable Mining’s flagship asset was instantly distinguished as an exceptional project.
The key consideration that has limited iron ore development over recent years is capex. After viewing numerous assets with huge tonnage potential, positioning themselves as +30Mt per annum producers, investors of late have baulked at the high capital intensity and associated risk. This is where Nimba’s exceptional value is highlighted; by combining high grade DSO material (thus requiring limited processing), virtually no strip ratio and proximal infrastructure, capital and operating costs at Nimba are anticipated to be relatively modest. With the combination of strong support from local stakeholders for the development of this asset, and this region of south-east Guinée as a whole, I believe that Sable Mining has a truly world-class asset with near term production potential.
These fundamentals were demonstrated to the market in March this year, through the publication of a PFS on Nimba. The announcement, which included an initial maiden JORC Reserve of 53.96Mt at a grade of 61.6% iron (‘Fe’) (calculated from the previous August 2013 JORC Resource of 135.5Mt @ 59.4% Fe), gave an early tangible insight into the considerable commercial value of Nimba. One of the most important aspects of the PFS was the capex forecast of US$299.3 million; in a market where capex for iron ore projects regularly runs into the US$ billions, this is a highly important differentiator. Operating costs (FOB Port Buchanan) were projected to be US$44/t and US$49/t based on Panamax direct loading to Europe and Transhipment plus Capesize to Asia respectively. With iron ore prices still remaining in the doldrums, with the iron ore 62% Fe spot sitting at US$82.0/t at the time of writing, Nimba still distinguishes itself as a competitive producer.
The PFS assumptions were based on an initial steady run rate of 3Mtpa over a mine life of in excess of 25 years. This mine life was calculated based on the (then) current JORC Resource of 178.1Mt, however this was updated to 181.8Mt at a grade of 58.8% Fe in April 2014. Further to this, there remains a considerable amount of potential resource upside, with a current exploration target of 200Mt from Plateaux 2 & 3, in addition to potential tonnages being added from the undrilled Plateau 1, the prospect of further material resource increases is clearly evident. While 3Mtpa is the basis for the current project there remains an opportunity for significant expansion in the future.
My arrival at Sable Mining comes at an opportune time in the Company’s evolution into a development and production company. My expertise derives from the marketing of iron ore products – and this will be of particular strategic importance over the next 18 months as we move towards production. Nimba benefits from a ~50% high grade, hard lump fraction, which translates into a highly marketable premium product. Initial metallurgical results have highlighted that the material tested exceeds the grade characteristics for both the Newman High Grade Lump (‘NHGL’) and Newman High Grade Fines (‘NHGF’) categories. This positions us strongly for export discussions into numerous markets, including Europe and China. With this in mind, it is important to note that Sable Mining has not yet entered in to any off-take agreements, leaving all financing options open to us at this time. As we progress towards the completion of the Bankable Feasibility Study in H1 2015, the Board will evaluate financing opportunities including project finance, debt, off-take and equity raisings, ensuring that we take the route which will simultaneously limit dilution and minimise risk. I believe that this approach will continue to keep our shareholders aligned with the advancement of Nimba and gain maximum exposure to the anticipated increase in value that the Project generates through the development and construction process.
In tandem with keeping the desires of our shareholders at the fore, we have also continued to strive to deliver the optimum pathway for development at Nimba for the benefit of all stakeholders. The Project’s transition into the production phase during the next 18 months will crystallise the value of this strategic national asset, and will make tangible contributions in both Guinée and Liberia through the generation of revenue, creation of employment and other ancillary benefits. The spirit of co-operation between the Governments of the Republic of Guinée and the Republic of Liberia, Sable Mining and its partners, has been highlighted by the grant of the Export Decree and Mining Licence by the Government of the Republic of Guinée and the MOU with the Government of Liberia regarding infrastructure development. These relationships will remain critical to the onward development of Nimba, and I am delighted that this coalition will continue to reap rewards for the entire area – opening the region up to external investment in order to promote and thereby generate revenue from the development of its world-class natural resource base.
