AIM-listed Sable Mining Africa is working towards the completion of the bankable feasibility study for its West Africa-based project, which it expects to publish in the first half of 2016 in preparation of commercial production.
Despite the significant drop in iron ore prices, Africa-focused iron ore exploration and development company Sable Mining Africa, believes that by the time its flagship high-grade, high tonnage Nimba iron ore project in south-east Guinea begins production, it will have excellent commercial potential even during periods of depressed spot prices, chairperson Jim Cochrane tells Chantelle Kotze.
In early 2014, analysts generally predicted iron ore prices to decrease to between 115 $/t and 125 $/t, with 115 $/t considered a price floor by some. However, by last year in March, the price had dropped below 115$/t and the trend continued into 2015, with prices dropping below 70 $/t.
The most pessimistic analysts are now predicting price drops in 2015 of below 60 $/t for the remainder of the year. The drop in iron ore price can be attributed to an oversupply of iron ores to the seaborne market, in particular from the major producers; growth in seaborne Chinese demand, which has remained strong, despite most growth replacing domestic Chinese production; the resilience of high-cost iron ore producers; and the general market expectation of declining prices. However, the price outlook of iron ore lump looks somewhat different.
Despite the initial price drop in lump premia in 2014, lump premia prices have been increasing to >30% over benchmark prices and are currently at an all-time high – providing some relief to producers of iron or lump against the drop in iron ore prices. In light of this, Sable remains confident that Nimba is geared towards achieving good prices for its high grade direct shipping ore product.
High grade, low capex asset
The Nimba iron ore project has a maiden JORC reserve of 53.96 Mt at a grade of 61.6% iron and a JORC resource of 205.2 Mt at a grade of 57.8% iron. The preliminary feasibility study (PFS), undertaken by Xstract Mining Consultants in March 2014 confirmed the commercial viability of Nimba producing a product mix of 50% lump : 35% fine : 15% LG fine as an opencast operation with a simple dry crush and screen processing method. The PFS further confirmed the viability of Nimba, which is expected to produce..
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