Name and Location
Tete pig iron and ferrovanadium project, Mozambique.

Client
Baobab Resources.

Project Description
A prefeasibility study (PFS) completed on the Tete project has confirmed a strategic asset of global significance, based on a one-million-tonne-a-year pig iron operation over a minimum 20-year mine life. This will result in the development of 110-million tonnes of ore – 15% of the total 727-million-tonne resource, 553-million tonnes of which is defined to be underlying the 2.5 km² footprint of the Tenge/Ruoni prospect. This highlights the opportunity for expanded production scenarios of two- to four-million tonnes.

The proposed one-million-tonne-a-year pig iron production will result in about 25 000 t/y of vanadium slag by-product, with 3 300 t/y of contained vanadium or 5 900 t/y of vanadium pentoxide. At a vanadium recovery rate of 78%, this equates to a potential final contained vanadium capacity of 2 590 t/y.

Titanium from the slag is technically not proven and not considered an option at this stage of the project.

The modular character of the plant equipment supports a staged development model, thereby limiting initial financial exposure.

Value
The base case scenario of one-million tonnes a year of pig iron production estimates a capital expenditure of $1.14-billion.

Duration
Not stated.

Latest Developments
Baobab Resources has recommended that shareholders vote in favour of a capital-raising plan to fund the definitive feasibility study (DFS) work programme on the Tete pig iron and ferrovanadium project.

The conditional placing agreement grants African Minerals Exploration and Development Fund subsidiary Redbird various subscription options – expiring in June 2016 – which could boost its shareholding to 37.85% and potentially raise more than £4-million for Baobab.

Baobab has encouraged shareholders at the upcoming December 30 general meeting to vote in favour of the placing agreement, which enables Redbird to subscribe for another five-million shares at 20p apiece, equating to £1-million.

The company agreed to conditionally place a further 8.5-million shares at 15p each, or £1.27-million, with Redbird and grant it an option for an additional 8.5-million shares at an exercise price of 20p apiece, or £1.7-million.

Redbird will, subject to passing of the conditional placing resolution and the waiver being passed, also be granted options to subscribe for up to 27-million shares at an exercise price equal to 105% of the volume-weighted average price for the five consecutive trading days immediately prior to the date of exercise.

The funds raised through the placing will be used primarily for the Tete pig iron project’s DFS activity, which includes pilot plant metallurgical testwork on a 15 t bulk sample and a limited 3 000 m drilling programme to bring resources to measured status and support the first 25-year mine life of the project.

The DFS will also focus on the continuing environmental studies and progressing to memorandums of understanding for power, rail and port allocation, as well as to a detailed study on the power-generation options available to the project and long-term supply solutions.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Baobab Resources, tel +61 8 9430 7151, fax +61 8 9430 7664 or email info@baobabresources.com.