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Interim Results
Sable Mining Africa Ltd, the AIM listed iron ore exploration and development company, has presented its results for the six months ended 30 September 2014.
Highlights:
· Focus on the high grade, high margin, low capital intensity Nimba Iron Ore Project in south-east Guinea
· Commercial viability of Nimba demonstrated through Preliminary Feasibility Study which indicated comparatively low capex of US$299.3 million (including US$39.7 million contingency) projected
· Maiden JORC Reserve of 53.96 million tonnes at a grade of 61.6% iron , a mineral resource of 181.8Mt at an in-situ grade of 58.8% Fe – considerable exploration upside potential
· High grade DSO and Low Deleterious Elements – only a simple crush and screen process will be required in the early years of production
· Grant of Export Decree and Mining Licence granted by the Government of the Republic of Guinea
· Memorandum of Understanding with Government of Liberia regarding infrastructure development – existing nearby standard gauge railway approximately 26km away, linking the region to the major Liberian port of Buchanan
· Bankable Feasibility Study currently targeted for publication in 2015
Sable Mining Chief Executive Andrew Groves said, “Nimba remains an iron ore project with considerable commercial value through its vital combination of high grade hard lumpy DSO material, low strip ratio, proximal infrastructure and low capital intensity. Despite the evident downturn in the commodity market, I am confident that Nimba’s key attributes place it as one of the very few undeveloped iron ore assets capable of getting into production in the current climate. We have a period of important news flow planned for 2015 and beyond, and I believe that these developments, in particular the BFS, will further demonstrate Nimba’s exceptional value in the market place.”
Chairman’s Statement (In Full):
As shareholders will no doubt be aware, the market sentiment towards iron ore has changed markedly over the past 12 months. However, I am pleased to advise our investors that Sable Mining remains in a strong position compared to many of its peers, with an exceptional high grade, low capital intensity project primed for swift development and a cash treasury capable of supporting the Company through its near term key development objectives. I continue to believe that our flagship asset, the Nimba Iron Ore Project in south-east Guinea (‘Nimba’ or ‘the Project’), represents considerable value for Sable Mining, and I am confident that the Bankable Feasibility Study (‘BFS’), which we currently anticipate publishing in 2015, will demonstrate its significant commercial value, further fuelling our strategy to move forward with development and production.
There are several key considerations to note as important differentiators between Nimba and many of its iron ore peers. Perhaps the first concern for many investors in the space – particularly in the current market for junior mining companies – is the projected capex. On this point, Nimba sets itself apart from competing projects with a modest projected capex of $299.3 million. This cost, which is very low in the global theatre of iron ore projects which routinely come in with capex figures ranging in the $ billions, is due to the combination of high grade DSO material (requiring limited processing), virtually no strip ratio and proximal infrastructure.
This particular combination of factors (explained above) also has a highly positive impact on projected FOB (Free on Board) operational costs, which are expected to be in the range of US$44/t and US$49/t, based on Panamax direct loading to Europe and Transhipment plus Capesize to Asia respectively. This obviously plays an enormous part in highlighting the Project’s worth particularly in light of the dramatic downturn in iron ore spot prices in recent months. It should also be noted that one of Nimba’s primary USPs is the premium that the Company believes is achievable for its product, bearing in mind the high grade, hard lump fraction. A comparable for the potential premium which could be achieved is BHP Billiton’s Mt Newman project, which currently achieves a premium of $18/t.
Financial Review:
Sable Mining is reporting for the six months ended 30 September 2014 a pre-tax loss on continuing activities of US$3.3m (2013: US$8.6m). The post-tax loss attributable to shareholders for the period was US$3.1m (2013: US$16.8m). As at 30 September 2014 cash balances were US$11.5m (2013: US$5.0m).
Outlook:
Our focus will remain twofold over the coming months as we simultaneously advance both the BFS and also secure the infrastructure development agreement with the Government of the Republic of Liberia. This second point will be advanced in addition to seeking the other mandatory elements to secure our end-to-end logistics chain including the lease agreement with the Liberia National Port Authority and the rail agreement with the Government of Liberia. We maintain an active dialogue with all of the appropriate parties and remain encouraged by the progress made to date.
The progression of our BFS remains a primary objective for the Board, and we continue to target delivery of this in 2015. The continuing effects of the Ebola virus has however necessitated a review of our activities and projected timescales in Guinée and Liberia.
As we continue the development of the BFS, the Board will undertake negotiations in relation to securing the necessary financing for the mine build. The Board currently anticipates appraising opportunities including project finance, debt, off-take and equity raisings, selecting the optimum route to achieve production whilst minimising dilution and financing risk. I look forward to providing further updates regarding the BFS and associated development in due course.
I would like to take this opportunity to thank our valued shareholders again for their continued support and look forward to 2015, as we deliver further development milestones and approach commercial iron ore production.
Jim Cochrane
Non-Executive Chairman
21 December 2014
