[miningmx.com] – IRON ore production from the Republic of Congo (RoC) received another boost after Australian-listed Equatorial Resources announced plans for a $231m mine, rail and port producing 2 million tonnes/year (mtpa).
Shares in the company received a 7% lift taking gains since the company’s 52-week low on June 20 to nearly 65%. Reflecting the sectoral switch out of resources, shares in Equatorial Resources are more than half of 2012 levels, however.
Results from a scoping study said Equatorial Resources’ Mayoko-Moussandji project would have a 23 life of mine. Although at 2mtpa, output was modest, operating cash cost estimates came in at $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. A rail route already exists of about 5mpta between the Mayoko iron ore deposits and Pointe Noire, RoC’s nearest port some 465km away. According to Exxaro Resources’ estimates, the rail route can be upgraded to 15mpta in time.
The company said it would begin to assess raising capital for the project but added that it would attempt to trim upfront capital and operational costs further through a combination of equipment leasing, product offtakes and partnerships.
The Mayoko-Moussandji project is located near to the larger Mayoko Lekoumou which is being developed by JSE-listed Exxaro Resources.
Exxaro Resources said in April it hoped to produce first iron ore production from its proposed 10mtpa mine in 2014. Exxaro Resources was waiting on the RoC government for granted of a mining convention (mining licence).
“The study demonstrates that our project has a number of advantages,” said John Wellborn, MD and CEO of Equatorial Resources. These included the potential for a high quality product, low capital requirements, competitive operational costs, he said. First production from Mayoko-Moussandji was likely to be 15 months after the final investment decision.
“While the 2mtpa production rate is modest by global standards, the study suggests good potential for a relatively low-cost entry into the market,” said Investec Securities in a note to clients.
It added there was “good potential” for Equatorial Resources to reduce its costs through a partnership with tExxaro Resources.
