28th Apr 2015 07:58
LONDON (Alliance News) - Ferrum Crescent Ltd Tuesday supplied an update on the infrastructure development at the Moonlight iron ore project in South Africa after the company began a bankable feasibility study on the project in the fourth quarter of 2014.
"Following the start of work in the fourth quarter of 2014, the bankable feasibility study and corporate activity have escalated significantly, and the board believes it is appropriate now to announce to the market more detailed levels of information on our infrastructure development," said Managing Director Tom Revy.
Ferrum Crescent said it began conducting the feasibility study on the project due to the global iron ore market showing signs of improved prices for premium pelletised products, adding that based on current activity in South Africa that the aim of having the project up and running in 2019 "fits in well" with local infrastructure expansion schedules.
"The company has been able to progress negotiations regarding project development with a series of parties, including infrastructure providers," said Ferrum Crescent.
The Moonlight deposit is located three and a half hours away by road from Johannesburg in an area "able to offer an almost complete infrastructure solution for the project" with the Thabazimbi railhead located 220 kilometres away from the mine. Ferrum Crescent said the South African government is currently developing a proposed slurry pipeline route and power, water and port infrastructure in the area.
Ferrum Crescent is talking to the relevant government bodies and undertaking community engagement work surrounding the infrastructure options available for the Moonlight project.
The company said roads would be used during the construction of the mine, utilising the public access roads to deliver materials and services to the sites, and Ferrum Crescent said it is benefiting from the government's upgrade to the N11 highway which lies 8 kilometres north of the project, which provides a "major arterial route to the coast", it said.
The company said Transnet Freight Rail has begun a rail infrastructure programme in the area due to future forecasts showing increased demand for coal in the nearby area. Ferrum Crescent said it held talks with Transnet in March.
Transnet confirmed it has completed the first of four stages of upgrades, which included the construction of a passing loop to allow wagon trains to pass between Lephalale and Thabazimbi.
Stage two will expand the capacity of the train route between Lephalale and Thabazimbi to 6.0 million tonnes per year with construction due to begin in June and be completed a year later. Stage three will increase the capacity between Thabazimbi and Ermelo to 12.6 million tonnes per year, starting in April 2016 and being completed by December 2017.
The final stage will then double the capacity from Thabazimbi to Ermelo to 24.0 million tonnes per year with construction beginning in June 2018 with the target of completion in June 2020.
Ferrum Crescent said that Transnet is also conducting a feasibility study for a new heavy haul line from Thabazimibi to Ermelo, which would introduce additional capacity of 30.0 million tonnes a year from 2024 onwards.
"Transnet Freight Rail Chief Executive Officer Siyabonga Gama has publicly stated that re-building freight capacity on the regional network is key for future development," said the company. "Once the Moonlight iron project bankable feasibility study production figures are confirmed, Ferrum Crescent will finalise the application for the required rail capacity."
Transnet also will increase the capacity of the Richard's Bay Line to 81.0 million tonnes from 72.0 million tonnes, with a further expansion to 97.0 million tonnes expected by 2020. The Richards Bay port, where the line runs, is currently the most suitable port available to Ferrum Crescent, for product to be sold overseas.
The Richard Bay port has a number of terminals for the export of a range of commodities, with the multi-purpose terminal handling various general and break bulk commodities including ferro chrome, pig iron and steel and iron products. This terminal is due to be expanded to 60.5 million tonnes a year from 22.6 million tonnes by 2040.
Transnet Port Terminals operates some of the terminals at the port, and Ferrum Crescent said it will provide Transnet with details of the production output and timing from the Moonlight project and enter into negotiations for port allocations.
In terms of power for the project, Ferrum Crescent said the Eksom operated Medupi power station is located in Lephalale and is the nearest source of power supply for the project. The plant is being constructed and comprises of six 800 megawatt units with 4,800 megawatts of capacity. The company said the Moonlight project would need between 110 to 120 megawatts of power.
"Although a service request was previously submitted, Eskom advised that it would not be able to provide these requirements until early 2017 when the third unit at Medupi is on line," said Ferrum Crescent. "Consideration will also be given to the potential of self-generation options. Once the final power requirements are determined during the bankable feasibility study, the service request will be updated and resubmitted to Eskom."
Potential sources of water supply for the Moonlight iron project include the Mokolo and Crocodile River Water Augmentation projects or direct extraction from the Crocodile River. Other options would include water supply from the Limpopo or Lephalala Rivers by transfer of water allocations through purchases or leases or artificial recharge facilities along the Limpopo and or Lephalala rivers, said the company.
"This work is actively forming the basis of progressing the Moonlight bankable feasibility study on a number of fronts, and I look forward to announcing a further update to the market shortly," said Managing Director Revy.
Ferrum Crescent shares were down 1.4% to 0.493 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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