West African Minerals upbeat on scoping study results

West African Minerals Corporation announced the details of its recently completed scoping study on the Sanaga Iron Ore Project, located near the Port of Douala, Cameroon, on Friday.

The AIM-traded company said the study indicated “robust” economics and favourable capital and operating cost fundamentals for an open pit iron ore mine and concentrator using transportation to the Cameroon coast - either by barging down the Sanaga River and transhipping at sea, or using a slurry pipeline to a port in the vicinity of Yoyo.

It said the Sanaga deposit contained previously released CIM-compliant mineral resources of 82.9 megatonnes at 32.1% iron, as previously announced on 5 February 2015.

The Sanaga Project is situated in coastal Cameroon, 70km from the Atlantic Ocean, with access to existing road and power infrastructure, West African explained.

In the study, the company said two project options were identified to transport product into seagoing vessels, barging or a slurry pipeline, with a net present value of between $262m and 292m and an internal rate of return of between 29% and 37%, with a 29 to 46 month payback on capital costs.

Upfront capital costs would be between $194m and $298m, depending on the transport option chosen.

Production would be 2.4 megatonnes per annum of “premium grade” 69% iron concentrate, with a current study life of mine of between 16 and 17 years.

The life of mine strip ratio would be 1.48, with the study suggesting a time frame of 24 months to full production from the final investment decision.

“WAFM is very pleased to announce the results of an independent scoping study which has identified two potential pathways to production of 2.4 million tonnes per annum of premium grade iron ore concentrate,” said the company’s chairman Gerard Holden.

“The geometry of the mineralisation, which outcrops at surface, lends itself to low cost, low stripping ratio open pit mining.

“Metallurgical testing on the primary magnetite ores indicate that the project can produce a high-quality iron ore concentrate product that will command a premium price in the market place.”

Holden said the Sanaga Project's proximity to the ocean and access to existing road and power infrastructure would allow low capital expenditures and a short timeframe to develop export infrastructure.

“These advantages are borne out by the robust project fundamentals and attractive economics demonstrated by the study.

“Sanaga represents an opportunity to develop a low capital intensity project with short pathway to cash flow,” Holden explained.

“Ongoing feasibility work and engagement with regulators and stakeholders is planned as the next steps to advance the project.”