Mbalam Iron Ore Project, Cameroon

The Mbalam iron ore project includes the development of iron ore deposits in Cameroon and the Democratic Republic of the Congo, West Africa. The project is being developed by Sundance Resources and is estimated to produce 35mtpa over the next 20 years. Open-cut mining will be used to recover the iron ore.

Four main deposits - Mbarga, Mbarga South, Metzimevin and Nabeba - will be initially developed under the project. The majority of the resources are contained in the Mbarga and Nabeba deposits. The project also includes the Meridional, Njweng and Letioukbala deposits, which require further exploration.

The Mbalam iron ore project has been put on a fast-track schedule, with production scheduled to begin in 2014.

Environmental approval was obtained from Cameroon in July 2010.

The first stage of the project is expected to cost $4.6bn. CITIC Securities arranged the project's finance.

The infrastructure to be constructed includes processing plants, stockpiling facilities and a railway system. A new port, which will handle 250,000dwt vessels, will be built as part of the project.

In May 2011, it was reported that Sundance was to sell a 50% stake in the project to a strategic partner in exchange for off-take agreements and financial assistance. This partner is expected to join the project in June 2011. The final investment decision on the project will be made by the end of 2011.

Once the project is under development, Sundance will become one of the top ten iron ore producers in the world.

The company hopes to secure long-term supply contracts with major steel producers across the world.

Reserves

The Mbalam mine is estimated to contain more than 800t of iron ore. Its probable reserves are estimated at 251.5t at 63.57% iron.

The indicated and inferred resources of the Mbarga deposit are 157.2t at 59.4% iron. Indicated and inferred resources of the Mbarga south deposit are 20.7t at 57.5% iron.

The inferred and indicated resources at the Metzimevin deposit are 15.2t at 59.5% iron, whereas those at the Nabeba deposit are 291t at 62.3% iron.

Geology and mineralisation

The Mbalam project is characterised by two types of iron mineralisation. One is a near-surface, high-grade hematite mineralisation, and the other is an itabirite-style mineralisation.

The Mbarga deposit contains four types of mineralised zones which have different chemical compositions. The supergene zone features high quality and low-contaminant mineralisation. The surficial zone is located over the supergene zone and contains high levels of alumina. Positioned beneath the supergene zone, the transitional zone contains high silica levels. The fourth zone Phos is characterised by high levels of phosphorous.

The Nabeba deposit features three types of mineralised zones, which include the surficial zone, supergene zone and sub-grade zone. The surficial zone features high levels of alumina (4.9%). The supergene zone, the most important zone of this deposit, contains high-quality deposits in large quantities. The sub-grade zone is a discrete area featuring elevated silica and alumina levels.

Mining and processing

Exploration activities started in Cameroon in June 2007 and in the Democratic Republic of the Congo in February 2010. More than 500 holes have been drilled at the two mines using two reverse circulation rigs and a diamond drilling rig.

WorleyParsons carried out the pre-feasibility study for the first stage of the project in January 2008. A pre-feasibility study for stage two and the definitive feasibility study for phase I were completed in April 2011. The definitive feasibility study for phase II is to begin in 2012.

The first stage of the project includes the development of the hematite deposits and the construction of a railway system and a deepwater port.

The railway system will include a 510km railway line between Mbarga and Cameroon, and a 70km rail spur to Nabeba. Phase II will include the development of the itabirite deposits.

Transport and handling

In September 2010, Sundance signed two memorandums of understanding with China Harbour Engineering Company and CRCC China-Africa Construction. The two companies will be responsible for building a deepwater port and railway line, and for supplying rolling stock for transporting the mined ore.