Glencore Xstrata, the joint-owner of the Zanaga Iron Ore project in the Republic of Congo along with Zanaga Iron Ore Company (ZIOC), has reported attractive economics for the project after the feasibility study (FS).
According to the study, the project can be carried out in two stages, where the first is expected to produce 12 million tonnes (Mt) a year of iron with a capital outlay of $2.2bn, while the second will produce 18Mt a year from an investment of $2.5bn; total production would be 30Mt a year from a combined investment of $4.7bn.
The two-stage development process in the FS has shown many advantages over the pre-feasibility study (PFS) carried out in November 2012, which proposed a single-stage development of 30Mt a year of iron ore at an investment of $7.5bn.
The first stage will comprise mining high-grade, near-surface ore for the first eight years of the mine's 30-year life and the second stage will involve open pit mining of the magnetite ore body.
The FS also says that transportation of iron ore to port can be done through slurry pipeline in both the stages, thus reducing the overall delivery costs.
ZIOC non-executive chairman Clifford Elphick said the results of the FS on the Zanaga project clearly demonstrate a highly attractive and globally competitive iron ore project, producing a premium product at bottom quartile operating costs.
"Glencore's staged approach to development has yielded substantial value add for the Zanaga project, significantly reducing financing requirements, lowering capital and execution risk, and maximising capital returns," Elphick said.
"This has enhanced the ability to finance the stage one development of the project, which offers compelling economics on a standalone basis. In addition, phasing the capital cost provides the potential to finance the stage two expansion through existing project cash flows to achieve a total 30Mt a year scale operation."
"Following completion of the feasibility study, the project team has submitted applications for a mining licence and environmental permit, are progressing with establishment of the project's fiscal regime, and will shortly be engaging with international contractors in advance of commencing FEED engineering."