logo-loader

Baobab Resources: Analyst eyes ‘new value’ as iron ore resource grows in Mozambique

Published: 22:38 30 Aug 2011 AEST

no_picture_pai

Baobab Resources (LON:BAO) Tete iron ore project could ‘take on a new value’ as its resource grows and the transport infrastructure develops in the region, according to Fairfax Securities mining analyst John Meyer.

The company’s primary asset is found in a prime location in the Tete province of Mozambique – one of Africa’s fastest growing mining regions.

Baobab today announced that the South Zone, which is part of the group’s primary target known as the Massamba Group trend, now has a 113 million tonne inferred mineral resource. This new resource takes the group’s total resource beyond the 160 million tonne marker.

Managing director Ben James says the group is at a tipping point, as it moves towards its resource target of 300 million tonnes. He added that he is confident that Baobab will achieve this target and highlighted that more resource estimates are scheduled in the coming weeks and months.

The company also confirmed that it is still drilling other parts of the large iron ore project, 

“Baobab is working fast to prove a sensible resource at Tete and are moving rapidly towards pre-feasibility on the project,” Meyer said in a note to clients. 

“We see the project taking on new value as the resource grows and as transportation infrastructure plans into the region develop.”

In a note to clients today Meyer emphasised the potential for Tete to become a major project.  “The group has nine drill rigs running with a total of 11 scheduled to be turning this year. We are confident that the team should achieve their target of proving more than 300 million tonnes of resources this year.  

“We feel the overall resource could be in the billions of tonnes although we are less sure of the economic benefits of drilling such a large resource to resource status at this stage.”  Meyer added that the Tete resource is open along strike as well as at depth, and more zones of mineralisation remain unclassified because more drilling is required to prove a resource. 

Like with most bulk commodity projects, particularly in under-developed countries in Africa, infrastructure and logistics are key. And in that respect Baobab is fortunate to share an attractive ‘post-code’ for mine development.

Indeed there are a number of significant mine development projects currently underway within the Tete province of Mozambique, the most notable being Rio Tinto’s recently acquired US$5 billion Riversdale coal project.

This major project, and its associated regional development, may be greatly beneficial for Baobab as it continues to develop its flagship project.

“The Tete project lies on the Zambezi river which is cited as a potential route by Rio Tinto for transport of coal from Riversdale,” Meyer highlighted. “Upgrading and extension of existing rail lines into the region also offer ‘open’ potential to ship transport substantial tonnages of iron ore to the coast from the region.  

“The Tete project is close to a number of other large scale coal and iron ore projects and is in good company when it comes to the planning of transportation infrastructure.  We believe a number of new rail lines and ports will be built to connect the region to the coast and world markets offering a number of routes for ore out of the region in time.” 

In this morning’s statement Baobab confirmed that drilling is now complete at the Chitongue Grande Extensions (which is another part of the Massamba Group trend) and resource estimation will start shortly. Meanwhile at a separate prospect on the licence, Ruoni North and South, drilling is also nearing completion.

The first analytical results are due from Ruoni in the coming weeks and subsequently the resource estimates are expected in October. Meanwhile drilling at the nearby Tenge prospect will also start next month. 

Speaking about future resource expansion, James added: “With the resource drilling programmes at Chitongue Grande finalised, and all but complete at both Ruoni North and South, we remain confident of delivering on our stated objective for 2011.  

"In addition to these, Tenge also has the potential to add substantial upside - an indication of how much should become apparent before the year end."

Focusing back on the South Zone, the new resource statement puts head grades at 28 per cent iron, 0.2 per cent vanadium and 10 per cent titanium and it reports an indicative average magnetite concentrate grade of 61 per cent iron, 0.7 per cent vanadium and 7.7 per cent titanium at a mass recovery of 23 per cent.

Baobab also confirmed that the resource remains open along strike and at depth and it will continue to drill the prospect next year.

 

Poseidon Nickel signs binding agreement with Mineral Resources to divest...

Departing Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) CEO Craig Jones and incoming CEO Brendan Shalders join Proactive’s Jonathan Jackson to discuss the divestment of Lake Johnston to Mineral Resources Ltd (ASX:MIN). Jones, who has played a pivotal role in this strategic move, shared insights on...

3 hours, 27 minutes ago