State signs on to help SAFM fund project
PERTH (miningweekly.com) – Iron-ore miner South American Ferro Metals (SAFM) has signed an agreement with the state government of Minas Gerais, in which its Ponte Verde project is located, to assist in funding the expansion of the project.
SAFM was currently working on a bankable feasibility study to increase the capacity at Ponto Verde from 1.5-million tons a year to eight-million tons a year. The study would be completed by the third quarter of this year.
Under the terms of the framework agreement signed with the state government, the state of Minas Gerais, through a representative body, would work to assist SAFM in securing relatively low cost financing for fixed investment and working capital, and would provide significant fiscal concessions, as well as support and assistance in the licensing process.
The fiscal concessions would result in a cost saving of between $30-million and $35-million over the first three years of the expansion, as Ponto Verde was declared exempt from sales taxes levied by the state.
In return, SAFM has taken on a number of responsibilities, the most significant of which would be a total investment of $285.12-million between 2015 and 2017, the creation of 500 direct jobs in 2017, favouring local suppliers and service providers during the expansion of Ponto Verde, achieving a processing capacity of around four-million tonnes a year of beneficiated product by June 2019, and achieving revenues of R$360-million in the third year of operation.
SAFM told shareholders on Monday that it was confident that these undertakings could be achieved.
The Ponto Verde project has a resource of some 301.60-million tons, grading 40.65% iron, and produced 445 759 t of run-of-mine product during the three months to December, as well as 251 099 t of beneficiated product.
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