The minerals subsidiary, MagMinerals, is finalising the financial requirements for the much anticipated tak-eoff of potash production at its 2200-square-kilometre Kouilou concession, near the Atlantic port city of Pointe-Noire, its website says.
The company says a feasibility study being done by SNC Lavalinto is due for completion in the fourth quarter of this year, and actual production is scheduled for 2010.
The project is to reopen Africa's only major potash resource, for which there is said to be a big world market.
SNC Lavalint will reportedly complete a bankable feasibility before year-end. Project financing is sais to be well advanced and strong interest from debt providers. Ameropa and potential equity and marketing partner will reportedly provide a bankable offtake contract to support financing.
The project is expected to yield 580 000 t/y of potash at an estimated capital cost of $500-million.
It will be based on the application of solution-mining technologies to the company's 100%-owned carnallite deposits, which underlie much of the Makola licence area, which supported commercial underground potash production in the 1970s but was abandoned owing to uncontrollable water ingress.
MagMinerals has already drilled ten commercial-scale wells to extract the resource.
Solution mining produces potash-rich brine that is treated in a crystallisation plant to produce granular and standard-grade potash fertiliserst.
A report produced at the initial phase of the feasibility last year indicated one of the primary inputs for this crystallisation process is natural gas, which is available locally, as it is currently flared from the area's significant oil production.
The production rate will be 600 000 t/y, at a cost of $412-million, with an internal rate of return (IRR) of 23% and a net present value (NPV) of $193-million.
At a production rate of 1 200 000 t/y, the plant has a capital cost of $665-million, with an IRR of 28% and an NPV of $493-million.
The decision to proceed with the magnesium project will follow successful start-up of the potash plant in 2010. A prefeasibility study is being conducted, with construction potentially starting in 2011 and production scheduled for 2014.
The planned magnesium production rate is 72 000 t/y.
The MagMinerals and MagMetals operations rely on access to land owned by another subsidiary, MagForestry, which controls the area's surface rights. It operates a 68 000-ha eucalyptus plantation under a 71-year concession.
The company has invested $8-million in the forestry project to date, and another $25-million has been commited over the next 12 years.
"Currently, MagForestry is exporting round logs to Europe at 15 000 to to 20 000 t each month for $48/t,. Unit production cost will decrease with higher volumes of production and chip mill start-up is set for the fourth quarter of this year" the company says.