Name and Location
Candonga direct shipping ore (DSO) project, Brazil.

Client
Centaurus Metals.

Project Description
A review of the Candonga feasibility study has delivered several positive outcomes, confirming the technical and financial viability of a 300 000 t/y DSO project despite significantly lower iron-ore prices in the international seaborne market.

The project has a proven and probable reserve of 1.2-million tonnes at an average grade of 60.5% iron.

The review concludes that the expected product mix from Candonga, combined with the structure of the domestic market in Brazil, provides a niche development and cash-flow opportunity to produce a suite of high-grade DSO products for the local steel and pig iron industries, provided that timely funding can be secured.

Further, the project is able to produce high-grade (+62.5% iron) lump and hematitinha products and a high-grade (64% iron) sinter feed product. Both products will have low impurities with a silica level ranging from 5.5% to 6.5% and phosphorus levels lower than 0.03%.

The plan is to develop a small-scale DSO mining operation that can supply a high-grade lump and coarse sinter product to the Brazilian domestic market to meet the high levels of demand for and the current undersupply of these product types.

Net Present Value/Internal Rate of Return
Not stated.

Value
Total direct capital expenditure (capex) has decreased to A$2.4-million, with total capex, including corporate overheads, currently at A$2.7-million, from the A$3.6-million capex estimated in the feasibility study.

Duration
Not stated.

Latest Developments
The environmental and mining approvals processes for the Candonga project are well advanced. The trial mining licence has been granted by the Departamento Nacional de Produção Mineral and requires only the requisite environmental approval to become fully effective. The company lodged its combined preliminary and installation licence (LP/LI) application in May 2014.

The approval of the LP/LI has been delayed by ongoing strikes in the relevant regional office of the State environmental agency, Supram, but delivery of the LP/LI is expected before the end of June if there are no further delays.

While the company remains confident that the Candonga project can generate positive cash flows, even at current iron-ore prices, the extremely negative global market sentiment towards the iron-ore sector has made it very challenging to finance the development of any new production capacity anywhere in the world, even for a low capex and niche market project like Candonga.

This means that, despite the significant progress in advancing the project to a development-ready stage, Centaurus is currently unable to pursue a standalone development of Candonga without the required project development funding being available.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Centaurus Metals, tel +61 8 9420 4000, fax +61 8 9420 4040 or email office@centaurus.com.au.