TSX-V-listed Tsodilo Resources says the current strong iron-ore price is supporting fundamentals for the development of its Xaudum Iron project, in Botswana.
The company, which has started a preliminary economic assessment (PEA) of the project, says it is poised for promising viability, with the iron-ore price having increased by 74% in 2020 and outperforming other metals by a significant margin – reaching close to $180/t in December, which is a level not seen for almost a decade.
The iron-ore price continues to stay in the range of $170/t, Tsodilo confirms.
“Last year may have been the start of a new Supercycle for iron-ore wherein supply is so inadequate to demand growth that prices rise for years, even a decade or more. The fundamentals for iron-ore are strong and, with this as a background, the company is moving forward with plans to further assess the potential of the Xaudum project by undertaking a PEA of the project.
“The primary objective of the PEA is to conduct an economic analysis of the potential viability of the deposit assessing the development options for the resource and generating a roadmap for progress through feasibility and mine development,” Tsodilo explains.
Metallurgical results show that the project’s magnetite product is expected to be a premium product containing about 67% iron, which is preferable over lower-grade iron-ores.
These high-grade ores and products currently command larger price premiums over standard ores, which grade 62% iron, resulting in higher margins for suppliers of high-grade products.
Further to this, "cleaner" iron-ores with an iron content equal to or greater than 65% use less coal per unit of steel and, as such, produce lower emissions. The current global drive for lower-emission steel production results in steel producers dramatically increasing their demand for these high-grade "cleaner" ores.
Preliminary work on the Xaudum project has defined an inferred mineral resource estimate of 441-million tonnes, with an average grade of 29.4% iron.
The project is a potential large and long-life Tier 1 mining project.
The PEA will evaluate a number of options for development of the project at a variety of scales including non-traditional but potentially profitable small-scale startup mining production options.
The options include ferrosilicon production from a magnetite concentrate, or mid-size scenario, whereby magnetite concentrate will be processed through a concentrator and transported to railhead and onto port facilities; large-scale mining options where full-scale mining will produce a magnetite concentrate processed by a concentrator plant, with further potential modification to a pellet, which will then be transported to port facilities.
Botswana has significant coal reserves which can be a major advantage for the Xaudum project, allowing for coal to be used in the beneficiation process to generate iron products such as iron pellets, sponge iron, pig iron and also steel, states Tsodilo.