JOHANNESBURG (miningweekly.com) – Global miner GlencoreXstrata and Zanaga Iron Ore Company (ZIOC) on Friday announced the staged development of their iron-ore project in the Republic of Congo (RoC) to lower capital costs.
This followed the completion of a revised scope for the Zanaga iron-ore project, as the joint venture partners moved to source funding for the project’s possible implementation.
The staged development of the proposed mine would significantly reduce the initial capital requirement and use existing infrastructure for initial production.
Aim-listed ZIOC, whose shares surged on the announcement, said in a presentation published on its website that the first stage of the project would cost between $2.5-billion and $3-billion, compared with the previous feasibility study’s cost estimate of $7.4-billion.
The first stage would be a 12-million-tonne-a-year operation with an additional one-million to two-million tonnes a year of direct shipping ore (DSO). In Stage 2, the project could be expanded to 30-million tonnes a year.
The companies are exploring the possibility of fast-tracking the DSO production, which would deliver early cash flows.
“The decision to proceed in a staged manner significantly enhances the financeability of the project,” GlencoreXstrata reported in a statement.
GlencoreXstrata and ZIOC agreed to jointly explore funding options with a view to attracting third-party debt and equity financing for potential project implementation.
ZIOC also agreed to contribute $17-million to the work programme, which had been extended to December 2014.
An investment decision would follow the conclusion of the feasibility study in the second quarter of 2014 and the subsequent application to the RoC government for a mining exploitation licence.