JOHANNESBURG (miningweekly.com) –Export tonnage from mineral explorer African Minerals’ (AML's) Tonkolili iron-ore mine, in Sierra Leone, slumped slightly in the second quarter of 2014, dropping from 4.55-million tons in the first six months of the year to 4.5-million tons of direct shipping ore (DSO) in 26 Capesize vessels for the second quarter.

Of this tonnage, 2.7-million tons was sold as A32 or lump blend, compared with 3.2-million tons in the first quarter, improving revenue capture.

The company said in a statement on Thursday that export volumes were negatively affected by a planned six-day shutdown at the rail and port, which enabled the upgrade of bridges along the railway to increase track speeds, reduce cycle times and improve asset life.

In June, with nine vessels completed, all exports were lump and fines, with the exception of one vessel of lump blend.
 
“On June 22, the company completed the loading of the Cape Rivera with 182 289 t of standard iron-ore fines. The loading of this vessel takes the total material exported from the operation to over 25-million tons since the start of loading for export in November 2011,” the company noted.

Prior to the loading of this vessel, a total of 141 Capesize ocean-going vessels and five smaller vessels had been despatched as standard sales cargoes on a free-on-board basis, where AML received payment net of the cost of freight for shipping to the customer.

Total tons shipped from the project by the end of June were 9.1-million tons, with the project remaining firmly on track for its export guidance of between 16-million tons and 18-million tons for the year.

AML CEO Bernie Pryor said the month of June was significant for Tonkolili, as it marked the project’s first self-arranged cost-and-freight.

“The 6% saving we have achieved, potentially in a permanent change, shows the benefit of our stated strategy of bringing more of our own control into the costly element of shipping,” he said.

Pryor added that the project’s sustainable production levels had also reached over 80% of the plant’s design capacity within 12 months of the end of construction.

“Production and exports to date remain on track and we are confident that our various technical improvements – key of which was the commissioning of our desliming circuits – will allow us to continue to produce at our budgeted levels with enhanced product quality all year round," he commented.

PHASE 2 DEVELOPMENT
AML recently entered Phase 2 development at Tonkolili, which would involve the expansion of DSO processing and infrastructure operations to a capability of 25-million tons a year.

The next stage of development would see the establishment of concentrator facilities to treat the large underlying ore resource, which required processing to a concentrate.

Over time, the concentrator capacity would increase to fully replace the depleting DSO resource.

Updating the market on the project’s progress, AML said, after six months of intensive engineering, testwork, analysis and process design, its Phase 2 could begin production as early as next year.

The estimated capital costs for this brownfield conversion and associated additional works had been reduced by over $1-billion to $311-million prior to final-value engineering

The concentrator would target production of 11-million tons a year of a +63% iron concentrate product, with an average mass yield of 56%, from head feed sourced from the medium-grade portion of the 1.1-billion-ton friable hematite resource.

“Based on current reference prices, gross revenue is expected to increase by $30/t for this concentrate tonnage, with an expected increase in earnings margin of between $20/t and $25/t, as operating costs for the concentrate product are expected to be slightly higher than that for the DSO,” said Pryor.

Once completed, the Tonkolili mine would be able to produce 11-million tons a year of high-quality concentrate and over 14-million tons a year of DSO product concurrently, maintaining a 25-million-ton-a-year production profile with all-year-round shippable products.