Mano River Resources, an exploration and development company focused on the discovery and development of world-class gold, diamond and iron ore deposits, mainly in West Africa, is planning to emerge as a producer of all three commodities in the region.
Emphasising this strategy in an interview with Mining Review Africa, company president and CEO Luis da Silva expresses the belief that Mano has reached a crucial point, with a number of developments providing a strong platform for better execution of the company’s growth strategy.
“We are fairly bullish on the long-term fundamentals of gold, diamonds and iron ore,” he says. “Strong growth in China and India, as well as other major emerging markets, is driving demand across the board, and we expect this to influence long-term prices.
“The diamonds from our Kono and Mandala projects in Sierra Leone and Guinea, both run by our subsidiary Stellar Diamonds, will provide the near-term cash flow,” he says. “Gold production will be achieved in the medium-term, probably not before 2012, and not far behind the gold asset we will have a huge iron ore mine in which the company will retain a 38.5% interest.”
The next five years we will see additional production from Stellar Diamonds, which is working towards bringing on line other advanced exploration projects, including the Tongo project in Sierra Leone and the Bouro kimberlite project in Guinea.
But da Silva emphasises that the development of the Putu iron ore project and the New Liberty gold mine would remain Mano’s key focus during the medium term.
New Liberty – Gold
“We are extremely positive about our New Liberty gold project and we remain on track to develop Liberia’s first large-scale operating hard rock gold mine,” da Silva says. The Mano plan 18 months ago was to mine New Liberty’s open pit reserves of 550,000 ounces at a rate of 70,000 to 75,000 ounces a year, giving it a mine life of seven years.
“We still plan to mine the mentioned reserves, however a decision on how this will be mined will be dependent on the results from further drilling targeting deeper zones which will likely include an early entry into an underground scenario. This will significantly increase the annual production estimates as well as the life of the mine.
“Our drill programme in 2009 will be focused on further delineating the ore body with an aim of justifying an underground operation. This could lead to a decision to mine by the end of next year.”
Da Silva says that results so far this year had exceeded expectations, and Mano was confident an underground mining operation would be commercially viable. “If the green light is given, while I can’t at this stage give you an accurate time line, the rule of thumb suggests that once funding is in place one would need two to three years for mine construction.” This suggests a possible start-up of production in 2012.
“New Liberty’s resource alone is likely to push to significantly north of two million ounces. Pending a mine decision being made on the potential underground operation we believe that at full production an annual target of 150,000 oz – 200,000 oz is achievable for some 15 years or more,” he estimates.
The capex estimate for the project 18 months ago was in the vicinity of US$60 million, but this did not include the possibility of underground mining which, together with the effects of inflation on equipment, particularly long-lead items, could easily double that figure.
Putu Range – Iron Ore
Turning to Mano’s Putu Range iron ore project in Liberia, Russian steel and natural resources company Severstal, through its wholly-owned Dutch subsidiary, Lybica Holding, signed a subscription and share purchase agreement worth US$41.5 million in May this year for a 61.5% stake in the project, which is held under African Iron Ore Group, an 80%-owned Mano subsidiary.
The deal also saw Severstal purchase 20 million shares in Mano through a subscription agreement, allowing Mano to raise US$4 million directly into the company. Severstal has an option to purchase a further 20 million shares in Mano at a later date, which would allow Mano to raise a further US$5.6 million.
“I would expect that the capital expenditure on the Putu project will exceed the original estimates of US$500 million to US$1 billion for the development of the mine and its associated infrastructure,” da Silva says. “Given the high inflationary pressures faced by the mining industry and the level of infrastructure development required, we are looking at capital expenditure well in excess of US$1bn, which is in line with other iron ore development projects of a similar scale.”
Putu will provide good average grades and substantial volumes. “Following the latest report by SRK, we have increased Putu’s resource estimates to 900 million tonnes. Ongoing exploration will be focused on increasing confidence in the resource to a JORC compliant category, as well as establishing the quality of the resource.
” Da Silva confirms earlier estimates that after the prefeasibility and feasibility studies, it would be early 2011 before a decision to mine is made, and from the start of construction to the point of commissioning would take another two to three years. “
"All of this is of course subject to the 25 year mining licence,” da Silva cautions. “Furthermore, we envisage that developing the mine at Putu will require significant infrastructural development – we will have to lay down approximately 130 km of rail, build a modern seaport, develop roads and construct a mining camp.”
Da Silva says that Mano is looking at three preliminary scenarios for the submission to the government of Liberia. These involve production levels of eight, 12 and 24 million tonnes per annum (mtpa).
Kono – Diamonds
“Stellar has achieved first production from trial mining at its 49:51 joint venture kimberlite dyke project with Petra Diamonds in Kono in Sierra Leone, and expects to achieve first production from its 100% owned Mandala alluvial project in Guinea in the first half of 2009,” da Silva says. “Mandala is reported to have an indicated resource of 536,000 carats and an inferred resource of 144,000 carats.
” The company’s production at Kono is at the trial mining stage, with underground bulk sampling showing grades of between 66 and 75 carats per hundred tonnes (cpht). The run of mine from the adjacent property held by Koidu Holdings is in the US$230/carat range.
“A decision to mine at Kono is largely in the hands of Petra as the operator of the project, but until further trial mining has been conducted a mine decision is neither necessary nor advisable,” da Silva says. “A mine decision on full scale mining is expected during 2008. Next year should see the joint venture produce in excess of 24,000 carats, but in 2010 it should shoot up to more than 100,000 carats. “The overall capital requirement for the project is about US$18 million, including further shaft developments. To date the joint venture partners have invested US$12 million into the project, but going into a full mining scenario could double these figures.
Stellar Diamonds has also allocated US$5.8 million for the development of the Mandala alluvial project, of which US$3.9 million had already been spent. This included a processing plant and the DMS recovery module.
The 100 tph DMS plant has been constructed and shipped to Guinea to be located on the Mandala site. The DMS plant will also be used to conduct bulk sampling on the promising Bouro kimberlite dykes, which overlap the Mandala licence.
“At full capacity Mandala is expected to produce in excess of 10,000 carats per month at an average value of US$65 per carat, with attractive margins. It will provide Stellar with near-term access to cash, which will be applied to refocus exploration activities,” da Silva says.
He also says Tongo in Sierra Leone is an exciting project, with historical data showing exceptional grades and diamond values in excess of US$200/ct. “For this reason it is one of our key exploration focuses.
Stellar Diamonds has traced four kimberlite dykes to date of varying thicknesses, and a 400 tonne bulk sampling programme is planned to sample material from two of the four.
The Bouro project in Guinea is another exciting project with significant long-term potential. “Initial estimates indicate grades of up to 500 cpht,” da Silva says, “and currently a bulk sample programme, which will use the processing plant at Mandala, is being planned.
“Mano is in a privileged position, given the difficult times currently in the financial markets,” da Silva notes. “Stellar has become self-reliant following its private placements, which means that Mano needs only to fund its gold and iron ore projects moving forward.
“Mano has already secured funding through to bankable feasibility study on the Putu Range iron ore project through its deal with Severstal. In addition, some of the funds made available through the subscription agreement with Severstal will be used to progress the New Liberty gold project through to the next stage of development.”