PERTH (miningweekly.com) – A feasibility study into the Candonga direct shipping ore (DSO) operation, in Brazil, has delivered positive results, ASX-listed Centaurus Metals announced on Tuesday.

The study confirmed that the project could deliver some 300 000 t/y of high-grade DSO material, at an operating cost of some A$14.90/t, over a three-year mine life.

For a capital investment of A$3.6-million, the Candonga project would deliver revenues of some A$36.5-million and earnings before interest, taxes, depreciation and amortisation of A$23.1-million, over its mine life.

“While the initial mine life is relatively short, Candonga can generate strong cash flows and returns for shareholders even in the current depressed pricing environment. This is a quality niche project with strong technical fundamentals which will create a strong foundation for us to move forward and grow our iron-ore business in south-east Brazil,” said Centaurus MD Darren Gordon.

The Brazilian cash flow would allow Centaurus to leverage its knowledge of the iron-ore sector in Brazil to expand its production base through the development of other similar low-cost DSO opportunities, which were currently being assessed, or the company’s fully licensed Jambreiro project, Gordon said.

The environmental and mining approvals for Candonga were well advanced and on schedule, and final approvals were expected in the first quarter of next year.

The company was hoping to complete a mining contract by the fourth quarter of this year and to start site development activities in February. First production has been scheduled for the second quarter of 2015.

“On the strength of the feasibility study results, the Centaurus board has endorsed the ongoing development activities associated with bringing the Candonga project into production by the second quarter of next year,” Gordon said.

Meanwhile, Centaurus on Tuesday also announced a maiden ore reserve of 1.2-million tonnes, grading an average 60.5% iron at the Candonga project. The ore reserve was scheduled to produce about 900 000 t of ore, at an average grade of 63.5% iron.

Of the total product, around half would be lump and hematitinha (pig iron, or small sinter feed), while the balance of the product would be high-quality sinter feed.