LONDON (Alliance News) - Ferrex PLC shares rose on Monday morning after it said it has finalised its plans for the first phase of the definitive feasibility study for the Nayega maganese project in Togo, and said it is expecting to receive the mining permit for the project soon.
Ferrex shares were up 14.7% to 0.545 pence per share on Monday morning.
Ferrex said the objective of the first phase is to export 250,000 tonnes of manganese ore per year to generate early cashflow, which will be followed by phase two, which involves the construction of a "low cost, high value ferromaganese production facility," it said in a statement.
The company's model for the first phase is subject to confirmation of the final fiscal terms of the Togo Mining Convention, and Ferrex said it is expecting to "finalise the Mining Convention before the end of the first quarter."
The Convention is a comprehensive document that covers operating and fiscal conditions for the project. The company is expecting a mining permit to be granted shortly after the Mining Convention has been finalised, said Ferrex.
"I am delighted to report that the Nayega definitive feasibility study components are complete with modelling demonstrating favourable economics with lower capital expenditure and operating expenditure costs than originally forecast for phase one as we develop a 250,000 tonne per annum, high grade manganese product mining operation," said Managing Director Dave Reeves.
The company has estimated the first phase will need USD14.5 million in capital expenditure, lower than estimates made by the company during the scoping study.
"I believe we can target more cost reductions, as recent significant exchange rate moves and falling oil prices are not reflected in these numbers," said Reeves.
The company is currently in "advanced discussions" with four parties about financing for the project.
"In terms of financing Nayega through to near-term production, on-going discussions with a number of parties to finance development serve to reinforce our positive views about the potential of Nayega; indicative term sheets are being reviewed to determine which offer will be best for shareholders," said Reeves.
The company is also investigating the potential for a USD2 million, small scale, accelerated start-up option for Nayega as an alternative to entering into a finance package for the full plant, which would involve a simple scrubbing and screening operation that would produce up to 60,000 tonnes per year. The accelerated start up would allow production to begin at the project within six months of receiving the mining permit, said Ferrex.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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