Sphere extends iron ore bid deadline

West Perth-based Sphere Investments has extended the sale process of a 51 per cent stake in the Geulb el Aouj iron ore project in Mauritania as $US500 million is shaved off the capital cost estimate.

Sphere, along with joint venture partner Société Nationale Industrielle et Minière said that it had granted interest parties until December 15 to submit final bids for the project stake to accommodate for parties that made site visits this month.

However, Sphere said that despite the extension, there was no guarantee the process will result in a commercially satisfactory outcome.

UBS is managing the sale process, which has been going on for more than year after Qatar Steel walked away from a $US113 million deal to acquire a 15 per cent interest in August last year.

Since then, Sphere has been evaluating options to enhance the value of the project with a concepts study by Prodemas International and ProMet Engineers, which reduced Geulb el Aouj's capital cost estimate by $US500 million to $US1.65 billion.

The reduction is on the back of adopting an alternative engineering, procurement and construction package that combines western technology providers with Chinese or Indian engineering and erection contractors.

The capital cost is based on a project output of 7 million tonnes per annum and the potential for a pellet plant to produce 7.5mt each year.

Meantime, Sphere's geologists have updated the exploration targets for the magnetite-quartzite deposits within the project area to 1.5 billion tonnes to 2.05bt, up from earlier estimates of between 1bt to 1.5bt.

Sphere said that based on the increased exploration target, there could be potential to upgrade the project output to between 15 to 30 million tonnes per annum.

Sphere added the board will meet again in late December to decide the best course of action for the project before introducing a new strategic partner.