Name and Location
Tonkolili iron-ore project, Sierra Leone.

Client
African Minerals (75%) and Shandong Iron & Steel Group (SISG) (25%).

Project Description
The Tonkolili deposit comprises Numbara, Simbili, Marampon and the newly surveyed Kasafoni, which have a Joint Ore Reserves Committee-compliant resource of 12.8-billion tonnes.

The project entails the development of a 45-million-tonne-a-year direct shipping ore (DSO) hematite operation.

The project, which has a 60-year life-of-mine, will be conducted in three phases, with the potential to increase capacity to 75-million tonnes a year in a fourth phase.

Phase 1 involved the complete reconstruction of the Pepel port and the 74 km of existing railway, the completion of a new 126 km narrow-gauge railroad and the establishment of a mine.

Processing will principally be through a 15-million-tonne-a-year wet plant, supplemented by other semimobile plants.

The resource will be capable of supporting production in Phase 1 for about seven years at an expected cost of $27.50/t of product.

Phase 2 will result in the expansion of the mine by 30-million tonnes a year to 50-million tonnes a year. This entails the development of a new purpose-built port at Tagrin Point.

The new port will have the ability to load Capesize vessels alongside the quay, avoiding the costs of using transshipment vessels.

At the mine, a new major concentrator will be built, producing 30-million tonnes a year of high-grade hematite concentrate.

This phase will be capable of supporting this expanded production for about 15 years, at an estimated cash cost of $21/t.

Phase 3 involves the production of magnetite concentrate from the primary magnetite mineralisation, following the construction of a series of large-scale magnetite concentrators on site.

Value
Phase 1 – $1.7-billion.

The capital costs, operating costs and construction schedule for Phase 2 are being developed by African Minierals’ engineering partner – China Communications Construction Corporation. Previous assessments of capital intensity for Phase 2 suggested a capital cost of about $3-billion.

The capital costs and maximum production tonnage for Phase 3 are yet to be determined.

Duration
Phase 1 entered into production in the fourth quarter of 2011 and ramped up to 20-million tonnes a year of DSO since May 2013.

Phase 2 is expected to enter production in 2016.

Latest Developments
African Minerals achieved its export production level for 2013, exporting 12.1-million tonnes of iron-ore from its flagship Tonkolili project.

This was an almost threefold improvement on the 4.1-million tonnes sold in 2012, and was in line with the company’s yearly guidance of between 11-million and 13-million tonnes.

The company loaded 12.2-million tonnes of iron-ore onto ships in 2013, with the third and fourth quarters contributing 2.8-million and 3.8-million tonnes respectively.

Nine ocean-going vessels were loaded in December, for a sales tonnage of 1.6-million tonnes for that month, while the tenth vessel had been partially loaded by the end of the same month.

CEO Bernie Pryor says the company continues to work towards a production consistency across the complete integrated logistics chain and remains confident of achieving the 20-million-tonne-a-year sustainable run rate as the company’s ramp-up continues in 2014.

Key Contracts and Suppliers
African Railway & Port Services (rail infrastructure); Prudential Group (investor); SRK Consulting (estimation services); China Railway Materials Commercial Corporation and Standard Bank (finance); Shangdong Iron & Steel Group (investor); WorleyParsons Europe (definitive feasibility study and front-end engineering design); and Sprott Resource Lending Partnership with Dundee Resources (lead financial arrangers).

On Budget and on Time?
Not stated.

Contact Details for Project Information
African Minerals, Mike Jones, tel +44 20 7104 2280.
Prudential plc, tel +44 20 7220 7588.
SRK Consulting, tel +44 29 2034 8150 or fax + +44 29 2034 8199.
China Railway Materials Commercial Corporation tel + 86 010 51895188.
WorleyParsons Europe (head office), tel +44 208 326 5000 or fax +44 208 710 0220.
Sprott Resource Lending Partnership, tel +1 416 943 4698.