[miningmx.com] – EQUATORIAL Resources, the Australian-listed iron ore development company, said it had been assured of access to a 465km railway linking its Mayoko-Moussandji project in the Republic of Congo (RoC) with the country’s nearest port, Pointe Noire.
John Welborn, MD and CEO of Equatorial Resources, added that the railway would stay in government hands following meetings with the RoC’s transport ministry. Open access to infrastructure is generally friendlier to junior miners.
“The government is fully aware of our staged development plan and the transport minister has confirmed that capacity will be allocated to Equatorial to enable the scale up to 2mtpa (million tonnes/year),” said Welborn in a statement.
Welborn said that discussions with a mining convention, which sets down commercial terms for the use of the railway and port, among other factors, was progressing. Shares in Equatorial Resources have yo-yoed this year, but are up a fifth in the last month.
The railway to Pointe Noire is thought to have a capacity of about 15mtpa and will be the same one used by Exxaro Resources which is developing the Mayoko-Lekoumou iron ore mine, its first major offshore development investment.
The two companies are thought to be investigating ways of cooperating in the use of infrastructure in the region, including the railway. Welborn said today Exxaro also favoured growing production from its mine in stages.
The South African firm said in April it hoped to produce first iron ore production from its proposed 10mtpa mine in 2014.
Equatorial Resources said on July 16 that the Mayoko-Moussandji project would require $231m in investment. The 2mtpa project would have a 23 life of mine and an operating cash cost estimates of about $41/t FOB.
Capital required to build first production of some 500,000 tonnes/year was estimated at $114m with a further $117m to reach first phase nameplate capacity of 2mpta, Welborn said in July.
UK broker, SP Angel, said the advance on the rail today helped make “the route to commercialisation more apparent” despite being a relatively small project. It added that the prospect of a strategic partner for Equatorial Resources had increased.
“Discussions have been on going strategic partner and with the ground work done, once a mining convention is in place, this becomes an attractive investment for a strategic buyer,” SP Angel said.
Another investor in the RoC is the Zanaga Iron Ore Company (ZIOC) which is partly owned by GlencoreXstrata. The Swiss-based company said in September it would press ahead with a study in the mine that could see total investment of $3bn.
The nearest port to ZIOC’s project is 380km away, requiring building either a railway or a pipeline where the iron ore can be pumped in a slurry.
