15th Sep 2014 11:30
LONDON (Alliance News) - Ferrex PLC Monday said it has initiated a two-phase approach focused on maximising the returns from its Nayega manganese project in northern Togo.
The first phase involves developing a low-cost, 250,000 tonnes per annum, 38% marketable manganese product open-pit mine in the near-term.
Phase two will see the company develop an in-country smelting facility to produce a valuable high carbon ferromanagnese alloy in Togo in the medium-term.
The mine design, schedules and tailings dam design have been completed with a independent study in regards to processing and local infrastructure due later this month, it said.
In the fourth-quarter of this year, the company said it expects to be granted a mining permit and receive the environmental permit for Nayega from the Ministry of Environment.
"The company and the government of the Republic of Togo are highly encouraged by the findings of the new scoping study and the possible production of ferromanganese in Togo. We will rapidly advance the testwork required for a pre-feasibility study and hope to release this study within six months of the award of the mining permit," said Managing Director Dave Reeves.
Phase two, the ferromanganese operation, could be constructed once the main Nayega mining operation has reached a steady state, and will greatly improve the profitability and length of the operation, said Ferrex.
"With the study showing a very low cost of production, this could transform this project into a long-life, high-margin cash producing asset for the company," added Reeves.
The smelting furnace is expected to be located in the south of Togo, where it will be close to port for the import of coke and export of product and close to sources of limestone and dolomite, producing a cash flow of USD20 million per annum. A heat-recovery system to produce the bulk of the electricity required has also been included in the costing, resulting in a capital cost of the furnace complex of USD45 million, Ferrex said.
The measured resource at Nayega totals 2 million tonnes at 17.1% manganese, enough to cover the first three years of proposed manganese mine life, and the total resource for Nayega now stands at 11 million tonnes at 13.1% manganese, all in the indicated and measured categories, said Ferrex.
Exploration outside of the resource area has defined additional targets, which have the potential to increase the size of the manganese resource, it added.
Ferrex's shares were down 3.9% to 1.11 pence per share Monday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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