West African Iron Ore

SOURCE:[Resource Opportunities] – West African Iron Ore has received the renewal for its Forecariah iron ore permits in Guinea. The three renewed exploration licenses cover an area of 1,050 square kilometres and incorporate an extensive iron district. The licenses are located just 35 kilometers from the proposed deep-sea ports of Kabak and Matakan. Rail line access to those ports will lie within the boundaries of the company’s licenses as another project further inland is developed by one of the majors.

The company is nearing completion of an initial resource estimate and has secured financing to fund the next stage of work. That financing was subject to confirmation of title, which has now been received.

Shares of WAI fell hard over the past couple years, first on drill results that fell short of expectations, compounded by a fall in the iron ore price and then uncertainty with regard to the title and the financing. All of those factors have now been reversed, setting the stage for a much higher share price.

The iron ore price was near $150 early last year, but fell to under $100 late in the year. The price has recovered strongly in recent weeks, and is once more over $130.

The project has the scope to host a very large iron ore deposit. Drilling on the Wondima target has outlined an iron deposit at surface which will form the basis of the initial resource estimate. Before proceeding with the resource calculations, the company is conducting further metallurgical testing. One of the objectives of that work is to determine if other metals present along with the iron are economically recoverable. Byproducts that might be extracted from the same basic mining/ processing operation could have a big impact on project economics. SRK, one of the top mining engineering firms, is overseeing the testing and working on the resource estimate.

The financing is being provided by China International Fund Limited (CIF), a Hong Kong-based firm with extensive interests in Africa. CIF agreed to a $30 million loan facility last year under a letter of intent. The first $2 million has already been advanced.

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West African Iron Ore