Togo – The funds delivered from the acquisition of Australian private company Chaffers Mining by AIM-listed iron ore and manganese development company Ferrex, will enable it to develop the Nayega manganese project in Togo upon receipt of the mining permit.
Ferrex is continuing to develop Nayega as a low cost manganese export mining operation with a view of production within nine months of receipt of the mining permit, which is due imminently.
The Chaffers acquisition follows a recently completed strategic review by Ferrex in consideration of the current low iron ore prices. The strategic review of its portfolio focused on how to best deliver rapid value to shareholders in the current commodity pricing environment.
The acquisition, which will enable Ferrex to commence production and cash generation with only working capital expenditure in the second quarter of 2016, also fits within the company’s strategic review of its current assets – directed at adding value for shareholders through near-term, low cost, compelling production opportunities.
Chaffers has negotiated a five year tribute agreement with Paddington Goldfields, a subsidiary of Norton Goldfields to mine certain defined gold deposits located on the Norton leases, located 30km north of Kalgoorlie in the heart of the Western Australian goldfields, for treatment at Norton’s nearby Paddington processing plant.
Ferrex MD Dave Reeves says it is very rare to find an opportunity which can deliver production in under six months from acquisition. “I am therefore personally very excited about the Chaffers project, which fits our goal of rapidly delivering cash flow at a low cost.
“Gold production will commence at 20 000 to 30 000 ozpa ounces, the cash flows from which will be used towards the development of the Nayega manganese project in Togo when the permit is received.
“With our focus firmly on producing cash from these gold assets for the next six to nine months, I have no reason to believe that the Nayega permit will not be fully granted when we have the time to turn our attention to developing this as our next cash producing asset,” says Reeves.
“In light of the continued depressed iron ore pricing environment we have been investigating various projects that fit the criteria highlighted above and continue to do so,” he adds.
Meanwhile, the appointment of Peter Hepburn-Brown to the Ferrex board and Peter George as COO will bolster Ferrex’s mine development expertise and can be leveraged both in terms of this new acquisition and any future ones. “This experience will be highly beneficial as we closely plan our next steps at the Norton leases in Australia and we look forward to reporting these plans to the market,” Reeves concludes.