Name and Location
Tete pig iron and ferrovanadium project, Mozambique.

Client
Baobab Resources.

Project Description
A prefeasibility study (PFS) completed on the Tete project has confirmed a strategic asset of global significance, based on a one-million-tonne-a-year pig iron operation over a minimum 20-year mine life. This will result in the development of 110-million tonnes of ore – 15% of the total 727-million-tonne resource, 553-million tonnes of which is defined to be underlying the 2.5 km2 footprint of the Tenge/Ruoni prospect. This highlights the opportunity for expanded production scenarios of two- to four-million tonnes.

The proposed one-million-tonne-a-year pig iron production will result in about 25 000 t/y of vanadium slag by-product, with 3 300 t/y of contained vanadium or 5 900 t/y of vanadium pentoxide. At a vanadium recovery rate of 78%, this equates to a potential final contained vanadium capacity of 2 590 t/y.

Titanium from the slag is technically not proven and not considered an option at this stage of the project.

The modular character of the plant equipment supports a staged development model, thereby limiting initial financial exposure.

Value
The basecase scenario of one-million tonnes a year of pig iron production estimates a capital expenditure of $1.14-billion.

Duration
Not stated.

Latest Developments
With the PFS successfully concluded, Baobab has embarked on a bankable feasibility study (BFS).

In Baobab’s results for the year ended June 30, 2013, it reports that work programmes have been prioritised to address key areas of perceived risk, with measured resource drilling and bench-scale metallurgical testwork well under way. A bulk sample has been collected and despatched to South Africa for pilot-scale comminution and beneficiation tests, prior to reduction testwork in the US and, finally, smelting studies.

Following the environmental impact scoping study completed during the PFS and successfully lodged with the relevant government authorities, wet- and dry season environmental baseline studies have been completed. These studies, complemented by a demographic survey currently under way, will form the basis of the environmental-, social- and health-impact assessment.

In parallel to the technical and environmental/social programmes, Baobab is making significant progress in formalising port, rail and power allocations on the existing and expanding infrastructure facilities. The company has signed a memorandum of understanding with the Mozambique power utility company Electricidade de Moçambique (EDM) and, in conjunction with EDM, has engaged Parsons Brinckerhoff to complete a study to identify and prioritise potential power sources and accurately estimate tariff rates.

The study will also assess the cost benefits of power cogeneration through the capture and treatment of offgasses from the iron making facility.

Further, agreements with private– and public–sector groups to secure access to port and rail facilities, with a focus on the Sena line and Beira port corridor, where capacity is being expanded, are in advanced draft form.

Baobab is actively pursuing a strategic partner to assist in developing the Tete project.

To expedite the process, the company has engaged the specialist mining corporate finance division of Standard Chartered Bank as its strategic adviser. Standard Chartered will assist Baobab in determining and executing its corporate opportunities in relation to the Tete project.

As part of the mandate, Standard Chartered will consider project partnership and offtake-related arrangements, direct equity investments and other corporate options, as well as financing alternatives.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Baobab Resources, tel +61 8 9430 7151, fax +61 8 9430 7664 or email info@baobabresources.com.