Name and Location
Mayoko-Moussondji iron project, Republic of Congo.

Client
Equatorial Resources.

Project Description
The Mayoko-Moussondji has a maiden probable ore reserve estimate of 38.5-million tonnes at 42.01% iron.

A prefeasibility study (PFS) on the Mayoko-Moussondji iron project has not only confirmed the technical and economic viability of the project but also demonstrated the potential for strong operating cash margins.

The PFS for the project is based on the staged development of a 2.5-million-tonne-a-year hematite fines product operation, starting with a production rate of one-million tonnes a year in Year 1 and ramping up to 2.5-million tonnes a year in the fourth year of operation.

Net Present Value/Internal Rate of Return
The project has an internal rate of return of 25.1% and an estimated post-tax net present value, at a 10% discounted rate, of $115-million and a four-year capital payback, based on a long-term index iron-ore price of $74/t (freight on board).

Value
The capital cost required to achieve throughput of 2.5-million tonnes is estimated at $181.16-million.

These capital cost estimates include a 15% contingency on all items.

Duration
Not stated.

Latest Developments
Equatorial has entered into a conditional sales agreement with Midas Global a subsidiary of European commodities trader Interalloys Trading, to divest of its Mayoko-Moussondji iron project, in the Republic of Congo.

Midus Global will acquire the project for A$5-million in cash, as well as a 2% royalty over all iron-ore produced and sold at the Mayoko-Moussondji operation.

Midus paid a A$500 000 deposit, which will be deducted from the price at the completion of the transaction.

A further A$300 000 will be withheld from the purchase price, which Midus will use to cover any outstanding liabilities on the project, with the excess to be returned to Equatorial.

“Interalloys is the right strategic partner for Mayoko-Moussondji. It has the skills, capacity and motivation to advance the project into production. The retention of a 2% royalty over all future production will allow Equatorial shareholders to remain a beneficiary of Interalloys' success and has the potential to generate significant value if and when future production increases, as a result of any recovery in iron-ore prices.”

Equatorial MD John Welborn has noted that the transaction will ensure that, notwithstanding the difficult economic climate for iron-ore projects, Mayoko-Moussondji has capitalised on its competitive advantage of product quality and infrastructure availability, and captured a first-mover advantage in the regional iron-ore industry.

In December 2014, Equatorial signed a mining convention agreement, which defined the fiscal rights and legal obligations of the Congo government and Equatorial in respect to the Mayoko-Moussondji project.

The company has also secured a 25-year mining licence over the project.

Key Contracts and Suppliers
WorleyParsons Services (PFS).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Equatorial Resources, tel +61 8 9466 5030, fax +61 8 9466 5029 or email info@equatorialresources.com.au.
WorleyParsons Services, tel +44 208 326 5000 or fax +44 208 710 0220.