LONDON (Alliance News) - Sable Mining Africa Ltd shares leapt on Thursday after it said it is in talks with the Liberian government about a potential 25-year, iron ore transshipment deal and infrastructure development agreement that will allow the company to ship its ore from Guinea through Liberia to the port Buchanan for export.
The deal is crucial for the company as it tries to get an export route for the iron ore from its Nimba Iron Ore project in neighbouring Guinea.
Sable Mining shares leapt 162.82% to 2.05 pence per share on Friday morning.
Under the proposed deal, the Liberian government will allow iron ore from Guinea to be shipped by rail to the Liberian port of Buchanan. Sable has an interest in an exploration permit in the Mount Nimba area of south-east Guinea, which has a JORC reserve of 54 million tonnes of ore at a grade of 61.6% iron. It also has an exploration project in Liberia, focused on the Kpo Range concession.
Sable will have pay the Liberian government between USD1.5 million and USD5 million a year, dependent on how much it ships, on top of any prevalent taxes and duties. The deal would have a volume limit of 10 million tonnes a year.
Sable will also pay a USD250,000 a year if the deal goes through, including an immediate payment when the deal is signed and will pay a further USD2.5 million toward social development funds for countries affected by the deal.
Within the first five years of the deal, Sable is expected to invest a minimum of USD300 million, mainly in infrastructure, with a further USD1 billion investment over the remaining 20 years of the deal.
As part of the proposed deal, Sable will be responsible for rehabilitating and expanding an existing railroad stretching between Yekepa and Nimba county, both in Liberia, to the port of Buchanan, which can be used by the company and by steel giant ArcelorMittal.
Sable will also be responsible for building a new railroad from Guinea, via Tokadeh to Yekepa, where it will join an existing railroad.
Sable is expected to begin iron ore shipments from Guinea through Liberia later in 2015.
"The agreement stands to bring enormous social and economic benefits, in the immediate as well as medium to long term to Liberia, in particular, and also to Guinea?two countries that have been seriously hit by the Ebola virus disease," said George Wisner, executive director of the National Investment Commission of Liberia.
"The company confirms that it is advanced discussions with the government of Liberia and the government of Guinea on this matter and expects to make a further announcement in due course, as appropriate," said Sable.
The deal with the Liberian government has been a long-time in the making. The company's Chief Executive Andrew Groves had told Alliance News back in October 2013 that Sable was hoping to get rail access from the Liberian government, as well as an export permit from the Guinean government, by the end of that year.
At that time, the company was also battling with ArcelorMittal over access to the existing rail line, which the steel giant was using for exports from its Yekepa mine. Sable claimed the line had enough ample spare capacity to support the five million tonnes of production a year Sable is targeting after 2015, but an ArcelorMittal spokesman had told Alliance News at that time that the rail line didn't have enough spare capacity.
Groves told Alliance News that once the problem of getting Sable Mining's product out of the country had been resolved, he was looking to export to Europe as well as China, which is the main destination for West African iron ore.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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