danke tommy-hl von wo..
----
July 11, 2012
Bellzone Has Now Commenced Iron Ore Production At Forecariah, As Work Continues On The Development Of The Six Billion Tonne Resource At Kalia
By Robert Tyerman - minesite
When Glenn Baldwin, the outgoing boss of Australian manganese group Consolidated Minerals, takes over from entrepreneurial Nik Zuks as chief executive of Bellzone Mining in September, he will find the company’s iron ore projects in Guinea well cued up to deliver significant progress.
Bellzone’s stock market value has lately plunged on permitting and other delays, but the company is now producing from its half-owned Forecariah project 70 kilometres inland, and has started loading its first iron ore at the port of Konta.
And progress should be pretty rapid from here on in. Finance director Terry Larkan, says the company expects to lift production to an annual three-to-four million tonnes by the end of the year. In addition, he says, “we have an off-take deal on the table”, which he hopes to be concluded “next month”.
Hinting at talks with “a big commodities house”, Larkan explains that Bellzone has more than one option: it could go it alone, or its 50 per cent joint venture partner, the multi-billion Chinese infrastructure investor China International Fund (CIF), could “tag along with us”.
With capital costs set at US$230 million, Forecariah is no mean project, but for Bellzone it’s just the aperitif before the main meal, which will be the development of the wholly-owned Kalia project in south-central Guinea.
Bellzone says a somewhat-delayed definitive feasibility study is due this month on the infrastructure for Kalia, which could contain as much as 6.1 billion tonnes of magnetite ore below an already-established JORC estimate of 414 million tonnes of oxide ore. The company estimates that in total the project could hold up to 1.5 billion tonnes of contained iron.
Taking Kalia into production will cost perhaps US$4.5 billion in all. However, Larkan, argues that the 414 million tonne oxide ore resource could yield 151 million tonnes of material grading 51% iron to provide cash for the main project. Bellzone, he suggests, is likely to take a “staged approach”.
That could mean spending US$1 billion to achieve annual output of eight million tonnes and then lifting that to 50 million tonnes “over four to five years”. Initial production at Kalia is scheduled for 2015.
With numbers like that, funding certainly represents a challenge for the company, which, with the shares trading at 17.75p, is currently valued at slightly less than £131 million. Larkan estimates that the company’s existing US$100 million cash pile will fall to US$75 million after spending on Forecariah.
But this is where CIF is expected to come in, having last year put US$103 million into the company, the major contributor in a total capital raising of US$236 million. CIF now has 15 per cent of Bellzone and is expected to fund the infrastructure for Kalia, which will require the construction of a railway and other facilities.
In the meantime, a licence to mine at Forecariah has now been granted and the project is at last up and running. The permitting was held up, says Larkan, because Forecariah was the first project permitted under Guinea’s new mining code. But now that it’s up and running it should also be able to make a contribution towards the costs of Kalia.
Forecariah contains an estimated 157 million tonnes of oxide ore, a resource which Larkan says will be updated before October. Bellzone hopes to establish a formal JORC resource on the project by the end of this year, or early next.
The project is, says Larkan, still “on budget” with “a bit of plant still to be added”. The operating costs should fall from around US$40 a tonne to “the mid US$30s” once production has been ramped up, against market prices of more than US$130 a tonne.
And the company isn’t the only interested party that’s pleased that progress is being made. Larkan recalls a top-level government visit to Forecariah a few weeks ago, accompanied by “huge celebrations”. He maintains Bellzone’s permit is “not conditional”, though it is expected to provide a road crossing and a study on a rail link connected to Kalia.
Investors’ nervousness about Guinea is overdone, insists Larkan. “The Guinea government is very sensitive about the perception of sovereign risk”, he says. So, can companies make money there?
“We should start turning a profit with the first tonne of iron ore”, argues Larkan and some bullish forecasters are now suggesting that Bellzone, which lost £29 million last year, could make as much as £14 million this year, with several times that on the cards for 2013.
|
Thread abonnieren
