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PrintAUSTRALIAN Stock Exchange-and JSE-listed Tawana Resources has lifted the trading halt on its stock after announcing a positive result from initial studies of its Mofe Creek iron-ore project in Liberia.
MD Len Kolff said on Tuesday that Mofe Creek represented "an exciting new iron-ore discovery in Liberia and it is certainly the place to be for West African iron-ore producers".
Mr Kolff cited the project’s close proximity to the coast and potential to produce a high-quality 60% iron concentrate through a low-cost mining operation as positive factors. He also pointed to ArcelorMittal’s recent approval of a $1.5bn expansion of its operations in Liberia as a positive factor.
But Tawana’s announcement comes at a difficult time for the iron-ore market, and South Africa’s junior mining group Petmin is looking to sell its Ginka iron-ore project in Liberia, which is a joint venture with AIM-listed Hummingbird Resources.
Petmin executive chairman Ian Cockerill, who is also chairman of Hummingbird, said: "Petmin has decided to focus attention on its iron sands-to-pig-iron operation in Canada. We have had several expressions of interest but nobody has come waving a cheque at us yet."
The reason for that is the state of the iron-ore market where prices have dropped to levels around $110/ton from about $150/ton earlier this year because of concerns over falling demand from China. Market concern is that the price could weaken further in the second half.
The end result of the weakness in the iron-ore trade over the past 12 months has been a slackening of interest in West Africa, where a string of junior and major miners had moved in to develop iron-ore projects that could provide competing supplies to the major operations in Brazil and Western Australia.
Mr Cockerill said: "I believe there are still good prospects for iron-ore mining in West Africa although these have been scaled back, as they have been around the world.
"The big advantage the West African projects have is that they will not be subject to the very high costs of expensive Australian labour.
"What has happened is that the potential profit margins from iron-ore projects have been significantly reduced because of rising costs and the falling price.
"Investors and boards are taking another look at them and saying perhaps it’s not the end of the world if we sit on them for a while," he said.
Mr Kolff said that Tawana believed the outcome of the preliminary desktop study showed Mofe Creek could have low estimated capital and operating costs and be able to produce iron at a cost of $35/ton "free on board".
"Tawana is aiming to develop an open-cut mining operation with a production period of at least 10 years. The strategic review process is progressing well," he said.
Tawana shares were untraded on the JSE on Tuesday, sitting at 7c, which is a 12-month low compared with a 12-month high of 33c.
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