A study into West Perth-based DMC Mining Ltd's Maroko iron ore project in the Republic of Congo has revealed potential revenue earnings of $US1.1 billion ($A1.2 billion) based on a 11 million tonne per annum operation.
A study into West Perth-based DMC Mining Ltd's Maroko iron ore project in the Republic of Congo has revealed potential revenue earnings of $US1.1 billion ($A1.2 billion) based on a 11 million tonne per annum operation.
The scoping study, undertaken by GRD Minproc Ltd, revealed a low cost direct shipping ore operation with operating costs pegged at $22 per tonne.
Capital cost is estimated at $208 million for the stage one 3Mtpa mine, and an additional expenditure of $303 million will be needed to upgrade to an 11Mtpa operation, projected to be achieved within four years.
The company said the project had capacity to generate potential revenue of $1.2 billion at current spot prices or $318 million for a 3Mtpa operation.
Below is the announcement by DMC Mining:
The Directors of DMC Mining Limited ("DMC") are pleased to release the findings of the Scoping Study completed by GRD Minproc Limited ("Minproc") on DMC's 80% owned Mayoko Iron Ore Project in The Republic of the Congo.
KEY FINDINGS OF THE REPORT
- Although the Mayoko Iron Ore Project is at a very early stage of development the preliminary economics appear attractive and therefore justify advancing to a more detailed level of assessment.
- Direct shipping ore (DSO) production of 3Mt/a to commence as stage 1, and to increase to 11Mt/a within 4 years.
- Existing rail capable of transporting 11Mt/a with minor upgrades.
- Capital expenditure estimate of USD$198 million for 3 Mt/a DSO operation.
- Capital Expenditure estimate of an additional USD$288 million (USD$486 million total) to achieve 11Mt/a DSO operation.
- Operating costs estimate of $22/tonne for 11Mt/a
- Revenue potential of USD$1.1 billion/a based on 11Mt/a at current spot prices or USD$302 million /a based on 3Mt/a at current spot prices.
- Timeline to production forecasted at 4 years to achieve 11Mt/a operation.
The scoping study commenced in Feb 2008 and has involved over 1,500 man hours from GRD Minproc expended across mining, processing and infrastructure assessments.
This included visits to the Republic of the Congo for discussions with the port, rail and power authorities. While the study does not meet Pre-feasibility Study standards it exceeds Scoping Study requirements with a number of key issues examined in considerably more detail than warranted for a Scoping Study.
Minproc has given consent to DMC to include the Executive Summary of the scoping study to this ASX announcement.
Minproc's assessment of mining and processing was based on the 33Mt Inferred Resource estimate previously reported by DMC. Haematite production would commence at 3 Mt/a and be ramped up to 11 Mt/a. Then, if necessary, the operation would produce nominally 3 Mt/a of pellets from the magnetite tonnage.
The preliminary mine design modelling was based on a 55% Fe run-of-mine product and 50% Fe cut-off grade and indicates the deposit has a number of favourable mining characteristics.
The key findings from the model are:
- Low average strip ratio of 0.51.
- High conversion rate with 96% of the resource falling within the optimised pit shell
- No pre-stripping is required.
The Scoping Study makes the following comment in relation to the ore grade and impurities:
- By international standards the iron ore grade is lower than typical for direct shipped ores and the impurity levels are higher than desired. However, this appears to be more a disadvantage than a project impediment. The ore may be amenable to upgrading by blending, selective mining or beneficiation during processing.
"The Mayoko Iron Ore project is proving to be a low cost DSO deposit with robust economics and a very real path to production. Given the low risk jurisdiction, supportive government and infrastructure largely in place, DMC's intention is to bring the project into production as quickly as possible" Executive Director David Sumich said.
DMC confirms that, effective immediately, it is commencing a pre-feasibility assessment of the Mayoko Iron Ore Project which includes further drilling (scheduled to start August 2008), metallurgical studies and also the necessary government agreements and regulatory approvals.
