27 Mar 2013 07:00
27 March 2013
Bellzone Mining plc
("Bellzone" or "the Company")
Scheduled Company Update and Forécariah Joint Venture guidance statement
·; Kalia Optimisation Study progressing well with study completion expected in Q3, 2013
o Starter oxide project expected to lead to full development of the Kalia magnetite project
o Optimisation Study activities fully funded
·; Revised Forécariah Joint Venture forecast now based on JORC statement
o Production range of 800,000 to 1 million tonnes in 2013
o Shipping continues with approximately 160,000 tonnes exported to-date
o Potential life of mine extension identified in JORC statement - study on Schist Project due for completion in Q4, 2013
·; Company has sufficient cash to fund operations through 2013
Bellzone Mining plc (AIM: BZM) is pleased to provide an update on its activities at the 100% owned Kalia project. In addition, the Company also today provides its anticipated production and shipping targets for the Forécariah Joint Venture (the "JV") for 2013.
Kalia
The Kalia Phase 1 Optimisation Study ("Optimisation Study"), the costs of which have already been included in the 2013 budget, is progressing well and is expected to be completed in Q3, 2013.
As previously announced, the Company had completed a detailed study on the full oxide and magnetite resource at Kalia in July 2012, and that study had indicated attractive economics for the project.
However, subsequent to the updated JORC resource statement in December 2012, Bellzone identified the potential to develop Kalia more efficiently given prevailing market conditions.
The revised plan is intended to generate more cash quickly and requires less up-front capital as it is smaller in scale in the initial phase. For example, as there is currently no trans-Guinea railway solution in place, the Company intends to generate early cash flows from trucking its product to port, potentially using some existing infrastructure.
The Company is working with a variety of experts from the start of the study such as Fluor Australia Pty Ltd, Coffey Mining Consultants, Wilson Bailey Holmes and Consulmet, who have been retained for their extensive iron ore and West African experience.
The key terms of the revised plan include the following:
·; The project scope includes development of the access road for the railway line from the Company's Matakan port site to the Kalia mine site.
·; The initial production rate has not yet been confirmed in the study, but expectations are that the project will deliver a 58% iron content product for phase 1.
·; Once the railway infrastructure is completed the Company plans to develop phases 2 (greater oxide project) and 3 (magnetite project) of the Kalia Project.
Forécariah Joint Venture operation
Production
Following the release of the maiden JORC resources at the 50:50 Forécariah JV operation ("JV") in January 2013, the JV operations management embarked on a detailed budgeting study which has resulted in the following revised targets for the 2013 calendar year:
·; Export 800,000 to 1 million tonnes of product, split equally between a 58% iron content lump and fines products
·; The average FOB cost is planned to be in the range of US$45-$50/t. The current average cost of shipping a 50-60,000 tonne geared ship is currently US$35-$40/t.
·; Completion of the pre-feasibility life of mine extension study in Q4, 2013.
The limited quantity of JORC DSO resources has meant a change from the export target of 3-4 million tonnes of product envisaged at the start of the project. It is expected that production in 2014 and 2015 will also be around 1 million tonnes of product each year. Upon exhaustion of the DSO resource, the Company expects to commence production of the JORC Schist resource which will be identified in the life of mine extension study referred to above.
Shipping
The underperformance of the transhipping system was announced in January 2013 and the Company informed the market that the re-engineering process would take at least six months.
Whilst the re-engineering process continues in accordance with this schedule, the JV is successfully using geared ships to export iron ore product from Guinea and generating cash flows and is intending to continue to do so at least until the re-engineering process is completed.
The use of geared ships during the re-engineering period has not affected the Company's ability to comply with its obligations under the offtake agreement in place with Glencore.
-Ends-
Analyst Conference Call
Management will provide further insight on today's RNS over a conference call at 11h00(GMT):
Dial in details: +44 (0) 2031394830
Toll Free: 08082370030
Participant PIN: 10381148#
Enquiries:
Bellzone Mining plc
Peta Baldwin, Corporate Affairs +44 (0) 1534 513 500
Canaccord Genuity Limited
Nominated Adviser and Broker to Bellzone +44 (0)20 7523 8000
Andrew Chubb/Tarica Mpinga
Investec
Chris Sim/Neil Elliot +44 207 597 5970
Tavistock (UK)
Jos Simson/Mike Bartlett +44 (0)20 7920 3150 / +44 (0)7899 870 450
About Bellzone Mining Plc
Bellzone Mining plc is an exploration and resource development company with iron ore and nickel/copper permits in the Republic of Guinea, West Africa. Kalia Mine Project is the Company's flagship project with a globally significant magnetite resource of 4.63 billion tonnes and some 822 million tonnes of oxide and supergene banded iron formation.
The Forécariah iron ore mine commenced production in May 2012 and is a joint venture between Bellzone (50%) and China International Fund Limited (50%).