Name and Location
Moonlight Crescent iron-ore project, Limpopo, South Africa.

Client
Ferrum Crescent and Business Venture Investments (BVI) No 1709.

Ferrum Crescent signed a farm-in and joint venture (JV) agreement with BVI in October 2015, which will fund the bankable feasibility study (BFS) in return for an up to 43% equity interest in the project’s holding company Ferrum Iron Ore (FIO).

The agreement terminates a previous memorandum of understanding between Ferrum and Principle Monarch Investments, which would have acquired a 39% interest in FIO in return for funding the BFS.

The first phase will focus on updating and completing a study on the best short-term business case model, based on technical, financial and committed domestic offtake details.

The study is expected to be completed within 12 months, and will result in BVI earning an initial 14% equity interest in FIO.

Ferrum will, however, be entitled to contribute R8.3-million to the Phase 1 BFS costs to reduce BVI’s equity interest to 10%.

The second phase to be conducted over 24 months, will see the completion of a study on the best short-term case defined during the first phase of the BFS.

The second phase will include all matters required by international project and equity financiers, including certain detailed deliverables agreed on with Ferrum Crescent.

Upon satisfactory completion, BVI will earn a further 29% equity interest in FIO, equating to a potential interest of up to 43%.

Under the terms of the farm-in agreement, BVI will appoint the manager of the BFS, as long as the appointee is an internationally reputable engineering firm capable of managing the conduct and completion of the stipulated farm-in programme.

BVI and FIO will also form a management committee to provide direction to for a team responsible for the day-to-day management of the BFS studies.

FIO will retain the right to negotiate and conclude term sheets for the engineering, procurement and construction (EPC) contract from an engineering consulting firm, to be recommended by BVI; negotiate an EPC management contract with Aurecon for project infrastructure; appoint an infrastructure financier if and when required in the future; and negotiate an EPC contract for the construction of a pelletising plant.

Project Description
The Moonlight Crescent iron-ore project, located on the Moonlight, Julietta and Gouda Fontein farms, in Limpopo, has been configured as a 4.5-million-tonne-a-year pelletised iron-ore concentrate operation. The project is expected to produce iron concentrate of about 69%.

In April this year, Ferrum updated the Joint Ore Reserves Committee- (Jorc-) compliant mineral resource to an estimated 307-million tonnes at 26.9% iron. This includes 172.1-million tonnes at 25.3% iron in the inferred category, 83-million tonnes at 27.4% in the indicated category and 52.6-million tonnes at 31.3% iron in the measured category.

The updated Jorc resource formed an important part of Ferrum’s plans to progress the project’s BFS in 2014. Ferrum says the mineral resource is suitable to inform the more detailed feasibility study work to be done, with the up-to-date assessment of “reasonable prospects for eventual economic extraction” also adding confidence to the project’s potential.

Net Present Value/Internal Rate of Return
Not stated.

Value
The total value of the project has not been disclosed.

Duration
Construction at Moonlight is expected to start by 2015 and will be completed by 2018.

Latest Developments
Ferrum Crescent has extended the timetable to complete Phase I of the BFS for its Moonlight iron-ore project to January 2017.

The three-month extension, to finalise the appointment of an internationally reputable engineering firm to manage the BFS, follows a request from JV partner BVI.

BVI remains committed and responsible for fully funding and completing the requisite BFS work streams across two phases to earn up to a 43% equity interest in the project’s holding company.

The company has sought and received, through its MD Tom Revy, assurances from Ovation Capital – BVI’s investment management house backer and sister company – that BVI will proceed with the BFS for the project as soon as is practicable.

Key Contracts and Suppliers
ProMet Engineers (detailed scoping study) and Mineral Corporation Consultancy (updated resource estimate).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Ferrum Crescent, tel +27 11 510 0159, fax +27 86 219 5701 or email info@ferrumcrescent.com.
ProMet Engineers, tel +27 21 556 9759, fax +27 21 556 9758 or email info@promet.co.za.