Sable Mining Africa, the AIM-listed iron ore exploration and development company, has signed an Infrastructure Development Agreement (IDA) with the Government of Liberia, a move that has caused its share price to rocket up 344%.
Sable Mining Africa’s 80% subsidiary West Africa Exploration S.A. (WAE) signed a 25 year deal relating to the development, ownership rights, financing, use and operation of rail and port infrastructure in the Republic of Liberia necessary to facilitate the export of iron ore from the company’s flagship asset, the Nimba Iron Ore Project in south-east Guinea, through Liberia utilising the established rail line from Yekepa to the Port of Buchanan.
Details of the deal
This landmark agreement provides a framework for the granting and obtaining of additional rights necessary to implement the Liberian aspects of the project and the rehabilitation and expansion of the existing rail corridor from Yekepa (30km from the Project), to the Port of Buchanan.
In the context of the Project’s development, signing of the IDA complements and builds upon the grant of Mining Licence and Export Decree by the Government of Guinea in September and October 2013, respectively, which authorise WAE to mine iron ore from Nimba and export through Liberia to the Port of Buchanan.
The total anticipated investment in WAE’s Mount Nimba project is valued at about $1.3 billion over the 25 year period. Sable Mining will invest $300 million in the first 5 years of its initial program and thereafter $1 billion in the remaining years of its operation.
WAE is expected to begin implementation in 2015 as soon as practicable after the IDA is consummated by the National Legislature. Thereafter, as necessary, WAE will rehabilitate and expand the existing rail corridor from the Yekepa to the Port of Buchanan in keeping with the use of third party access rights between the Government and Arcelor Mittal Liberia. WAE will also, in due course, construct a new section of railway line from Guinea to Tokadeh to Yekepa to join the existing railway in Yekepa.
Paving the way for West Africa
“The signing of this IDA is truly a momentous occasion for Sable Mining and the countries of Guinea and Liberia and is the result of many months of hard work by the Company, its partners, and numerous Government ministers, staff and representatives in both Liberia and Guinea,” said Sable Mining Chief Executive Andrew Groves.
“The significance of the IDA will be felt across the West African region, as it paves the way for the development of Nimba which, when in production, will generate significant revenue, employment opportunities and tax income. The spirit of co-operation between these two countries has not only meant a defined development path can be put in place for this strategic asset but also provides a clear signal to other international enterprises that the Mano River Union region is an attractive investment destination.
“On a project specific basis, the use of Liberian based infrastructure for export means that, compared to its peer group, Nimba’s capex requirement is greatly reduced. Nimba has demonstrated itself to be a unique iron ore asset with excellent commercial potential even during periods of depressed spot prices. It is high grade, high tonnage DSO and has simple mining and processing methods. Nimba therefore displays many of the key attributes which position it as an attractive asset to move through to production in the near term. These key differentials, coupled with an established export solution and the support and co-operation of both the Government of Liberia and the Government of Guinea, clearly distinguishes Nimba as a high priority target for investment and development.”
Liberian government focuses on transformation
The Government of Liberia represented by the Chairman of the National Investment Commission and other Government representatives of the Inter-Ministerial Concession Committee believe that the signing of an IDA represents an historic moment in a process which dates as far back as July 14, 1973 when Liberia and Guinea first signed a protocol paving the way for a transshipment of minerals between the two countries.
In keeping with the Agenda for Transformation and the Economic Recovery Plan, the government has ensured that the IDA socially obligates WAE, to – among other things – give first priority to qualified Liberians in terms of employment, help improve access to education and health care, give preference to Liberian suppliers in terms of procurement, and obey the Environmental Laws of Liberia.
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