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

Client
Baobab Resources and joint venture (JV) partner the International Finance Corporation.

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, of which 553-million tonnes are defined as 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 capital expenditure at $1.14-billion.

Duration
Not stated.

Latest Developments
Baobab is nearing the conclusion of the selection process of a Chinese partner to conclude a feasibility study at its Tete project.

The company has been in detailed discussions with steel industry specialists Sinosteel Equipment & Engineering and the China Metallurgical Group Corporation.

The partner will also assist the miner in performing pilot scale testwork and provide an engineering, procurement and construction contract proposal with industry standard process performance guarantees.

“With the technical merits of the project well established in the prefeasibility study and subsequent definitive feasibility study testwork, Baobab’s management team has been focused on investigating opportunities to reduce the initial capital expenditure required,” says MD Ben James.

He adds that, by adopting Chinese procurement, a more technically and commercially favourable path to production can now be pursued. “A process guarantee on the selected flowsheet will not only deliver enhanced project economics through improved capital efficiencies but will also, through to associated financial institutions, significantly reduce the timeframe to financial close and subsequent project execution,” James notes.

Baobab has also conducted bench-scale testwork on a 1.5 t iron-ore sample with Beijing Shenwu Environment & Energy Technology Company. The testwork was trialling an alternative reduction technology to the well-established rotary kiln process. Results were expected in March, after the Chinese New Year holiday period.

Meanwhile, James points out that the company is pleased to have the ongoing support of the IFC, its JV partner.
The IFC elected not to contribute its 15% of project expenses towards the unincorporated JV for the 2014 calendar year. In terms of the provisions of the agreement between the two companies, the IFC will incur a dilution in its percentage participation rights in the agreement from the current 15% to 12.88%. The IFC remains a 3% shareholder in the project.
The IFC has given Baobab the necessary assurances of its long-term commitment to the development of the Tete project. It intends to contribute its 12.88% of project expenses in this year.

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.