JOHANNESBURG (miningweekly.com) – Aim-quoted iron-ore and manganese development company Ferrex on Tuesday reported that a scoping study at its 74%-owned Malelane iron-ore project, in Mpumalanga, had led to a 65% increase in the net present value (NPV) of the project to $523-million.

In addition, capital intensity dropped to $72/t and operating costs were reduced to a minimum of $44/t.

Metallurgical testwork conducted over the past six months increased mass recovery of the fines from 20% to 37% through the use of an alternative density separation method.

This, combined with a reduction in quoted rail costs to the nearby Port of Maputo, delivered improvements in operating costs, product produced and, accordingly, the project’s NPV.

Ferrex MD Dave Reeves said the updated scoping study figures had substantially enhanced the project economics and indicated that, with the capital intensity expected to continue its downward trend, the project was within the first quartile of iron-ore projects worldwide. 

The company believed that the reduction in operating costs meant that the project would still be cash positive at the recent price lows, which Reeves said highlighted the project’s economic robustness.

“The iron-ore price is continuing to strengthen and is now at a higher level than it was before the price dip in September 2012.

"Our focus is now on completing the prefeasibility study and incorporating the latest metallurgical process in tandem with submitting a mining permit application in the coming year,” he indicated.

A maiden Joint Ore Reserves Committee-compliant inferred resource of 139-million tons at 37% iron had been calculated over 1.1 km of the 14 km strike length at Malelane, with a total exploration target of between 775-million tons and 930-million tons at between 34% and 36% iron recovery.

The company's growth strategy is centred on advancing its current assets and expanding its portfolio through acquisitions to build Ferrex into a midtier, low-cost iron-ore and manganese producer.