HomeBase MetalsNew Congo iron ore mine may cost US$4 billion

New Congo iron ore mine may cost US$4 billion

Iron ore mining “’
Core has a new US$
4billion project in
the Congo
London, England — MININGREVIEW.COM — 12 October 2010 – Core Mining Limited “’ an iron ore explorer backed by OAO Severstal “’ says its iron ore project in the Republic of Congo may cost as much as US$4 billion (R28 billion), and that it may consider an initial public offering to help fund the development.

“The company has spent US$40 million (R280 million) on exploration at the Avima project in the central African nation, and is planning a drilling programme next year that may cost as much as US$100 million (R700 million), CEO Socrates Vasiliades said by phone. “Core plans are to start output by 2015 at a rate of 20Mtpa,” he added.

Rising iron ore prices driven by surging demand for steel in China have spurred mining companies to search for new deposits in under-explored regions such as central and west Africa. Sundance Resources Limited and Bellzone Mining plc are among mining companies studying similar operations in the region, while Xstrata plc says it has an option to acquire 100% of the Zanaga iron ore project in the Republic of Congo.

“We have some good shareholders already on the registry, including Severstal, and as the project advances we are just raising capital as we require it,” Vasiliades said. “A future IPO is an option, definitely, but we haven’t finalised any plans in that respect yet,” he added. “Any IPO could occur before the completion of a financing study for the mine, currently expected in 2012,” Vasiliades said.

Severstal “’ Russia’s largest steelmaker “’ bought a 16.5% stake in Core in May. “It can invest as much as US$55 million (R385 million) in Core by the end of 2012 under the terms of the initial investment,” Core said at the time. Severstal last month agreed a 25-year plan to develop the Putu iron ore mine in Liberia for as much as US$2.5 billion (R17.5 billion).

“The Avima mine, port and rail project could cost between US$3 and US$4 billion (R21 and R28 billion),” Vasiliades revealed. “The company is also studying the development of the Kango project in Gabon where output could start in 2012,” he said.

As well as financial investors, Core has received interest from mining companies and other strategic-type investors that could contribute to infrastructure and port development,” Vasiliades continued. “The company is in talks with potential new investors and there may be some significant names coming on the registry during the next 12-18 months,” he hinted.