Explorer announces positive PFS results

3rd December 2021

Guinea-focused developer Société des Mines de Fer de Guinée (SMFG) chairperson Guy de Selliers and SMFG CEO Mamady Youla have announced the positive findings of its prefeasibility study (PFS) for the Nimba Iron Ore Project.

SMFG, an 85%-owned subsidiary of metals-focused exploration company High Power Exploration, noted that the 2021 PFS was led by independent Canadian engineering firm Hatch and evaluated the potential development of a mine, rail and port infrastructure to export up to 30-million tonnes a year. The ore would travel, by rail, from the Nimba project site to the Buchanan port, in Liberia, for direct shipping.

The Hatch-led team included engineering consulting firm SRK Consulting (UK), multinational engineering and construction firm Fluor Corporation, consulting, design, and construction services provider Golder Associates, China Harbour Engineering Company, China Railway Liuyuan Group and CCCC First Harbour Consultants.

The PFS promotes a robust rate of return on a forecast long-term benchmark iron-ore price of $76/t, compared with the spot price, which at the time was in excess of $94/t. The spot price does not consider the current premium paid for the high-quality iron-ore product that Nimba will produce, which is an average premium of about 18%.

Total project development costs are estimated at $2.77-billion, which include direct capital costs as well as all engineering costs, contingencies and taxes.

The direct capital cost for rail and port development in Liberia is estimated at more than $600-million and the project operating costs are estimated to be below $18/t. The 2021 PFS assumes that construction will start in 2023.

The operating cost estimate assumes, among other things, that access fees will be paid to the Liberian government, as the owner of the existing rail line, in line with established international principles. Formal, legally-valid authorisations for movement of ore through Liberia were obtained from the Guinean government in December 2020 as well as from the Liberian government in August 2021. The exact parameters of this nondiscriminatory, multiuser access agreement are currently under negotiation.

Under the development plan set forth in the 2021 PFS, significant additional infrastructure investment will be made by subsidiary company Ivanhoe Liberia to facilitate the transportation of ore to the Buchanan port. This includes the expansion of the capacity of the existing rail infrastructure between Tokadeh in Liberia and the Buchanan port, which spans 243 km.

Said expansion would include the rehabilitation of rail infrastructure alongside an abandoned rail right-of-way from Tokadeh to Yekepa as well as a significant expansion of the Port of Buchanan through the construction of a new berth and bulk materials handling facilities. This rehabilitation and expansion will also provide for passenger and light freight rail access, which could contribute significantly to regional trade and economic development.

The development of the Nimba project is expected to create 2 000 direct permanent jobs, of which about 1 500 would be in Guinea and 500 in Liberia, and will help support indirect secondary employment in both countries.

As such, the project will be a catalyst for regional development with long-term sustainable community benefits in health, education, skills training and entrepreneurship.

“The Nimba iron-ore deposit is renowned for its very high grade, as well as for its proximity to existing infrastructure. Bringing the project’s high-grade, low impurity iron-ore to global markets craving this type of ore to make steel that has a lower carbon footprint, which is now being demanded, will require access to the Liberian transport infrastructure,” De Selliers commented.

He added that SMFG is confident that satisfactory agreements will be reached with the Liberian government, as it is fully aware of the massive benefits that this project could create for the people of Liberia. Further, the successful development of this project will help advance the West African region into a significant iron-ore-producing area for the benefit of local and regional stakeholders.

The Nimba project is located in the Guinean Nimba Mountains, in south-eastern Guinea, adjacent to the Liberian and Ivoirian borders. It is a Tier 1 deposit containing “extremely high-grade, low impurity, direct shipping ore” and is considered one of the best undeveloped iron-ore resources in the world.

The mine contemplated in the 2021 PFS will be adjacent to a United Nations Educational, Scientific and Cultural Organization (Unesco) World Heritage Site, in an area that has been set aside for mine development by the Guinean government in a formal agreement concluded with Unesco. The 2021 PFS seeks to minimise the impact of mining on the buffer zone surrounding the site as well as to enhance the protection of the World Heritage Site. This will be achieved through the support of conservation measures already in place and through continued support to governmental authorities and nongovernmental organisations involved in the protection of the Nimba mountain range. It will set a new standard for environmentally and socially responsible mining activities.

“The PFS that we have completed is of an extremely high standard and provides a clear roadmap for development of our project. However, in doing so, we will be very mindful of the environmental challenges that come with this project given its setting in the Nimba mountain range,” remarked Youla.

The environmental and social impact assessments currently under way for submission to both the Guinean and Liberian governments uses industry best-practice methods that will demonstrate to all stakeholders the efforts SMFG is taking to “protect, preserve and enhance the environment in which the project will operate”, Youla added.

Earlier in 2021 World Bank Group member MIGA, provided political risk insurance for the development phase of the Nimba project. The policies cover political risks that could arise in both Guinea and Liberia during this phase of the project.