Having failed to secure finance to develop its Kipushi copper/cobalt project in the DRC, ASX-listed Cape Lambert Resources has put it on the back burner. Fortunately, on the back of increasing iron ore prices, the company has shifted focus to its Marampa project in Sierra Leone.
When the Kipushi project was first introduced the bobalt price was approximately $US95 000/t but now trades at less than $40 000/t. Together with the challenging security situation and the yet to be controlled Ebola outbreak, it has made the DRC a very difficult jurisdiction for Cape Lambert to work in.
Fortunately, the company owns the Marampa iron ore project which has been on care and maintenance since April 2015, but could benefit significantly from the recent increase in the iron ore price.
Since the iron ore price lows of 2015, the price has risen steadily and since January 2019 has been above $75/t (62% Fe, CFR China), peaking at $117/t in July 2019.
The quality and grade of Marampa ore means at extra 15% to 20% premium to these prices making for very robust project economics. The relatively high iron price throughout 2019 has resulted in third parties showing an interest in the Marampa project.
It has a total JORC mineral resource of 680 Mt at 28.2% Fe (above a cut-off grade of 15% Fe) covering four deposits (Gafal, Matukia, Mafuri and Rotret).
In 2013, the company completed an update of its 15 Mtpa scoping study which was based on exploiting the JORC compliant mineral resource and showed that 82% of the resource could be mined to produce high-grade hematite concentrate over a 15-year mine life.
The scoping study Update1 considered a three-stage development as follows:
- Stage 1 ‒ construction of a 2.5 Mtpa concentrate production operation, with 2 Mwtpa railed to the Pepel Port facility for transhipping to Cape sized vessels, followed by;
- Stage 2 ‒ expanding the total concentrate production to 10 Mtpa, with the additional concentrate being pumped via a 7.5 Mtpa slurry pipeline to an MIOL owned transhipping port at Tagrin point, where it would be dewatered and stockpiled before transhipping to Cape sized vessels; followed by;
- Stage 3 - expanding the total concentrate production to 15 Mtpa, with all concentrate being pumped via two 7.5 Mtpa slurry pipelines to Tagrin point, where it would be dewatered and stockpiled before transshipping to Cape sized vessels.
In 2014, Marampa was granted its mining licence and also achieved the issuance of its environmental licence.
In October 2014, the company announced that it had entered into a funding agreement with Timis Mining Corporation, which had acquired the assets of London Mining Marampa Mine Assets (Marampa mine) located on an adjacent mining licence, which included an agreement for Timis Mining to have exclusive rights to purchase and exploit, at their own expense, up to 1 Mt or any other greater amount as defined by further drilling of oxidised ore from Marampa.
Timis Mining later fell into administration due to the relatively low iron price. In 2017, Gerald Metals, in questionable circumstances, obtained a new licence and undertook refurbishment work on the process plant to recommence production with their first shipment of concentrate in June 2019.
On 3 August 2019, however, the Government of Sierra Leone (GoSL) announced that it had cancelled the licence of Gerald Metals and Shandong Iron and Steel (owner of the Tonkolili project and the Pepel rail and port.)
The GoSL has also expressed interest for Cape Lambert to acquire the Marampa mine, with the view that it could be merged with the Marampa project and use the Pepel port and rail to export its product.
Given this, the company will refocus its efforts in pursuing the interested third parties and others with the hope of progressing the Marampa project to development.
It has commenced the application process for reissuance of the relevant licences.
Commenting on this, Executive Chairman Tony Sage says:
“We look forward to working with interested parties and the GoSL to merge the Marampa project with the Marampa mine and bring it to its long-awaited production.”
“The company has the opportunity to partner with DGWA GmbH to position its diversified mineral investment portfolio into the European market, traditionally signal company focused with limited exposure to mineral based investments.”