PERTH (miningweekly.com) – ASX-listed Equatorial Resources has signed a mining convention agreement over its Mayoko-Moussondji iron project in the Republic of Congo.

The mining convention, which followed the grant of a 25-year mining licence in March this year, defined the fiscal rights and legal obligations of both the Congo government and Equatorial in respect to the Mayoko-Moussondji project.

Equatorial MD and CEO John Welborn said on Wednesday that the signing of the mining convention demonstrated the strong ongoing support received from the Congolese government for the planned development.

“Mayoko-Moussondji is a robust iron-ore project as demonstrated by the recently completed prefeasibility study. Securing the mining convention represents the last required administrative approval and indicates Equatorial has advanced a greenfield acquisition in 2010 to a fully permitted project opportunity,” Welborn said.

The Mayoko-Moussondji project was expected to produce 2.5-million tonnes a year, over an initial eight-and-a-half-year mine life. The mine would require a capital injection of about $181.16-million and would have an operating cost of $39.93/t.

Welborn noted that the Congolese government’s strong ongoing support would be essential as Equatorial confronted the current market environment for iron-ore.

Under the mining convention, Equatorial would have a 25-year unrestricted right to mine all forms of iron-ore within the project area, with the mining licence renewable for another 15 years.

The company would be granted access to the railway and port facilities for an initial 25-year period, with guaranteed capacity starting at 50 000 t/y in the first year of operation, and increasing to 12-million tonnes a year by year seven.

Equatorial would also have access to the lowest priced fuel at a subsidised rate, and would have taxation concessions, benefits and exemptions.

The Congolese government would act as a partner in the project.