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Equatorial Resources delivers pre-feasibility study for Mayoko-Moussondji Iron

Last updated: 13:30 26 Nov 2014 AEDT, First published: 12:30 26 Nov 2014 AEDT

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Equatorial Resources (ASX:EQX) has unveiled the results of a pre-feasibility Study for its Mayoko-Moussondji Iron Project in the Republic of Congo.

The PFS has built on the operation defined in the 2013 Scoping Study and has identified potential for an increased production rate to 2.5 million tonne per annum, a reduction in operating costs to below $40 per tonne, and reduced capital intensity to $72 per capacity tonne.

The capital cost required to achieve 2.5Mtpa is estimated at US$181.16 million. This translates to a capital intensity figure of US$72/t which is low when compared with other iron ore developments globally.

The project has important advantages including the potential for a high quality product, competitive operational costs, and a short timeframe to production based on access to existing rail and port infrastructure.

The PFS incorporates a revised mine plan based on a maiden ore reserve estimate generated from the upgraded resource of near surface hematite material, rail and port advancements, and other refinements since the completion of the Scoping Study.

The study also investigated the opportunity to reduce the project’s capital requirements through the use of leasing and build own operate contracting solutions.

The PFS for Mayoko-Moussondji is based on the staged development of a 2.5Mtpa hematite fines product operation, commencing with a production rate of 1Mtpa in Year 1 and ramping up to 2.5Mtpa in the fourth year of operation.

Further targeted drilling should continue to grow the resource with the upgrading of Inferred Resources into Indicated; this will be used to extend the mine life and/or to drive higher production volumes.

Additionally, chemical and physical properties of Mayoko Premium Fines are expected to demand premium pricing relative to the 62% iron index price.

Project returns include an IRR of 25%, post tax NPV of US$115 million and four year capital payback based on long term index iron ore price of US$74/t FOB.

Equatorial has been granted a Mining Licence for the Mayoko-Moussondji Iron Project and is currently negotiating the related Mining Convention Agreement and associated transport infrastructure agreements.

This pre-feasibility study will form the basis of due diligence reviews by project financiers and strategic partners looking to develop the project into production.


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