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 from May 2013.

Phase 2 is expected to enter production in 2016.

Latest Developments
African Minerals has appointed Ausenco as the engineer for the front-end engineering design (Feed) for the Phase 2 project expansion of its Tonkolili mine.

Ausenco will start establishing the flowsheet and design parameters for the first Phase 2 concentrator, with an expected design output of up to ten-million tonnes a year, from the results of the current on-site pilot plant work undertaken by the mine.

The scope of the work includes the raw water and tailings dam design and the power supply requirement.

The parameters are expected to be established during the second quarter of 2014 to ensure that long-lead equipment items are ordered “in good time”.

The first concentrator plant is scheduled to enter production in 2016.

“The establishment of the flowsheet will allow the optimisation of mass yield and concentrate grade – key components in establishing capital schedules, operating costs, resource life and the expected revenue per tonne ¬– from this portion of Tonkolili's production,” explains African Minerals CEO Bernie Pryor.

The initial expenditure for the construction of the concentrator – the earthworks of which will start at the end of the year – and associated facilities, will be funded from an existing $300-million in restricted project level cash, with the balance being sourced through new project debt facilities.

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); SISG (investor); WorleyParsons Europe (definitive feasibility study and Feed) 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, tel +44 20 7104 2280.
Prudential, 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.