18 December 2012 African Minerals Limited ("AML" or ... - InfoMine
18 December 2012 African Minerals Limited ("AML" or ... - InfoMine
18 December 2012 African Minerals Limited ("AML" or ... - InfoMine
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<strong>18</strong> <strong>December</strong> <strong>2012</strong><br />
<strong>African</strong> <strong>Minerals</strong> <strong>Limited</strong> ("AML" <strong>or</strong> "the Company")<br />
Expansion Update<br />
<strong>African</strong> <strong>Minerals</strong> <strong>Limited</strong> today provides an update on various project matters as the Company continues<br />
to ramp up production at the Tonkolili iron <strong>or</strong>e mine in Sierra Leone.<br />
SUMMARY<br />
<br />
<br />
Following a recent scoping level review of expansion options, the Company now intends to<br />
expand the existing rail and p<strong>or</strong>t infrastructure at Pepel rather than develop a new p<strong>or</strong>t at Tagrin<br />
Point.<br />
Targeting saprolite hematite concentrate production of up to circa 35Mtpa, with production<br />
commencing in 2016.<br />
Total capital expenditure on the revised expansion plan estimated to be circa $2Bn, with cash<br />
costs similar <strong>or</strong> lower than the current direct shipping <strong>or</strong>e phase.<br />
Substantial capital savings of circa $1Bn over previous expansion plan, with reduced risk, and<br />
lower social and environmental impact.<br />
CEO, Keith Calder, commented:<br />
"We have made good progress with value engineering and optimisation in our Tonkolili mine expansion<br />
strategy. While our strategy regarding the mine and plant is mostly unchanged, we have now decided to<br />
leverage our existing rail and p<strong>or</strong>t infrastructure at Pepel to achieve the expanded exp<strong>or</strong>t tonnage. This<br />
will significantly reduce capital costs, and de‐risk the project's delivery, whilst at the same time reducing<br />
social and environmental impacts. This approach will provide a significantly better value, capital<br />
efficiency and risk proposition f<strong>or</strong> all of our stakeholders."<br />
EXPANSION UPDATE<br />
The 12.8Bnt Tonkolili deposit is in the early stages of its growth, and the Company is currently exploiting<br />
the direct shipping <strong>or</strong>e ('DSO') p<strong>or</strong>tion of the resource.<br />
The Company has previously described the various stages of expansion of the deposit in "Phases",<br />
however the Company now considers it appropriate to consider the overall growth of the deposit as it<br />
moves into the saprolite hematite stage.<br />
The production of saprolite hematite material is expected to begin in 2016, with saprolite capacity being<br />
ramped up as the DSO resource enters the end of its life, to a currently envisaged 35Mtpa concentrate<br />
production rate. Subsequently the project is expected to grow into the multi‐generational magnetite<br />
resource.
The Company's scoping level assessment of Pepel shows that the current p<strong>or</strong>t can be expanded to<br />
handle the additional exp<strong>or</strong>t tonnage that is expected, with substantial capital savings in not having to<br />
build a new p<strong>or</strong>t at Tagrin Point, as was previously envisaged, and associated rail spur. Notwithstanding<br />
an increased operating cost (as compared to our previous projections, with the need f<strong>or</strong> transhipping<br />
being removed), there are expected to be significant net financial benefits in the net present value<br />
('NPV') due to a lower upfront capital requirement.<br />
There are also substantial risk benefits to not embarking on maj<strong>or</strong> greenfield construction that would<br />
require relocation of communities and the development of a new Environmental Impact Assessment,<br />
and which could have resulted in unf<strong>or</strong>eseen project delays.<br />
Thus, the Company has determined that, subject to f<strong>or</strong>mal Board approval, the plan f<strong>or</strong> expansion into<br />
the saprolite will now encompass:<br />
Production of up to circa 35Mtpa of 64% hematite concentrate;<br />
Modular, sequentially constructed process plants, with the first expected to enter production in<br />
2016;<br />
Modification to the existing narrow gauge rail, including double tracks where necessary, and<br />
additional rolling stock;<br />
Additional dredging and the construction of a second maj<strong>or</strong> ship‐loading facility and wagon<br />
dumper at Pepel; and<br />
Total capital expenditure on the revised expansion plan estimated to be circa $2Bn, with cash<br />
costs similar <strong>or</strong> lower than the current DSO phase.<br />
Early w<strong>or</strong>ks on this revised expansion plan have already begun to further refine project engineering<br />
design, and the Company expects to be in a position to provide m<strong>or</strong>e detail on capital cost and<br />
scheduling in H2 2013.<br />
Contacts:<br />
<strong>African</strong> <strong>Minerals</strong> <strong>Limited</strong><br />
+44 20 3435 7600<br />
Mike Jones<br />
FTI Consulting<br />
+44 20 7831 3113<br />
Billy Clegg / Ben Brewerton<br />
Deutsche Bank<br />
+44 207 545 8000<br />
Brent Nabbs<br />
<strong>African</strong> <strong>Minerals</strong> is developing its Tonkolili iron <strong>or</strong>e project in Sierra Leone, with a JORC compliant<br />
resource of 12.8Bnt. The project, which currently has a 60+ year mine‐life, is being developed in a<br />
number of staged expansions. The current operations are expected to produce 20 million tonnes of iron<br />
<strong>or</strong>e per annum at full capacity, expected to be achieved in Q2 2013.
The next stage of expansion now contemplates the production of up to 35Mtpa of 64% high grade<br />
hematite concentrate and the expansion of the current p<strong>or</strong>t facilities at Pepel, expected to enter<br />
production in 2016.<br />
The Company has also developed significant p<strong>or</strong>t and rail infrastructure to supp<strong>or</strong>t the operation of the<br />
project, via its subsidiary <strong>African</strong> Rail and P<strong>or</strong>t Services (SL) <strong>Limited</strong> ("ARPS"), in which the Government<br />
of Sierra Leone ("GoSL") has a 10% free carried interest.<br />
The Tonkolili project companies are currently owned 75% by AML, and 25% by Shandong Iron and Steel<br />
Group ("SISG"), except f<strong>or</strong> ARPS, which is currently owned 75% by AML and 25% by SISG, with the GoSL<br />
having a 10% free carried interest.<br />
www.african‐minerals.com<br />
END<br />
This inf<strong>or</strong>mation is provided by RNS<br />
The company news service from the London Stock Exchange