BaoBaB ResouR ces · T +27 (0) 18 788 6349 F +27 (0) ... The work being done for the pre-feasibility study is coming to a close with a draft due ... mental baseline study will be

BaoBaB ResouRceswww.baobabresources.com

2 MINING & RESOURCES � Baobab Resources

BaoBaB ResouRcesA World-class Project02With 85 per cent of the Tete project, located in Mozambique’s emerging mining and industrial hub of Tete - a region so rich in tier one deposits it has attracted some of the biggest names in global mining - Baobab is set to capitalise on a fortuitous placement that gives the company access to all critical infrastructure and complementary resource requirements.

3FEBRUARY 2013 � The African Business Journal

BaoBaB ResouRcesA World-class Project

MINING & ResouRces

With 85 per cent of the Tete project, located in Mozambique’s emerging mining and industrial hub of Tete - a region so rich in tier one deposits it has attracted some of the biggest names in global mining - Baobab is set to capitalise on a fortuitous placement that gives the company access to all critical infrastructure and complementary resource requirements.


TeTe, BaoBaB ResouRces’ (AIM: BAO) flagship

project, sits in a unusually fortunate confluence

of iron making circumstances – proximate to

water, coal and power, and it is this fortunate

situation that managing director, Ben James,

says is the key differentiating factor in the

project, distinguishing it from similar projects

in Africa.

At least as important, however, are the

sheer numbers. The Ruoni Flats Resource State-

ment posted in December upped October’s 482

Mt global JORC to 665 Mt, taking it beyond even

the 650 Mt forecast.

Not only that, but 490 million of those tonnes

are located in the Tenge/ Ruoni prospect, which

is constrained to a 3km2 footprint, meaning an

average mineralised thickness of 100 m up to

180 m in places. “It’s a mountain of it; a 120 m

mountain above the local topography, made out

of metal, “ says James, “so we have to flatten

that mountain out and turn it into a pit. There are

excellent implications for short haulage distances

and low strip ratios.”

In fact the strip ratio is likely to be so low for

the first 10 to 20 years of the mine at 0.4 that the

company will have to dig pits to get enough waste

material to build roads. “It’s a nice problem to

have,” he says.

A Scaled Up OperationThe Ruoni Flats Resource Statement numbers

moving the JORC from just shy of half a billion

tonnes to 665 Mt are not just heartening, in

practice this result means the company can now

think in terms of “a truly scaled up operation,”

says James.

The numbers reported are remarkable for a

pig iron deposit, although as James points out, a

great deal of confusion surrounds the difference

between pig iron and iron ore.

BeN JAMeS


D I G I TA LSURVEYING

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Johan TerblancheGeneral ManagerM +27 (0) 727 369 186

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“We’ve always suffered from the misconception

that we’re another iron ore project -- if we were,

we would need to be talking about tens of mil-

lions of tonnes of product per annum but we’re

not, we’re pig iron; we’re talking about ramping

up to 2 mtpa pig iron operation which in global

terms is significant.”

With the world’s largest pig iron producer

generating 2.5 mtpa, Tete’s forecast 2 mtpa

would most likely put Baobab in the top five

producers globally. The deposit thus makes for

an excellent platform on which a large scale pig

iron operation could be built to support a mine

life of 35 years with an annual rate of 4 mtpa, a

figure almost doubling the yearly figures of the

world’s single largest producer.

Strong Market FundamentalsPig Iron, derived from the intermediate smelting

of iron ore, is used alongside scrap iron in electric

arc furnaces to produce crude and finished steel

projects. Pig Iron is used with scrap iron to blend

out impurities and with the quality of scrap iron

in decline the amount of pig iron required to di-

lute impurities is growing. “As a consequence, pig

iron enjoys a substantial premium [in comparison

with] iron ore. It’s a significant value jump from

iron ore to pig iron that we want to capture.”

The market fundamentals for pig iron are

strong, with increasing urbanisation and a

worldwide decrease in the quality of scrap iron

driving demand.

“It’s an exciting future and one that Baobab is very proud to be involved with.”


Crucially, Baobab’s cost of production is

forecast to be at the bottom of the cost curve

due to such advantages as cheap thermal

coal close to hand, abundant hydro power and

water access.

“So all the core commodities for iron and

steel making are right there and allow us to

produce a tonne of pig iron almost half the

cost,” a significant margin of opportunity that

James sees the potential for manoeuvering

across all pig iron markets, including China,

where he says Baobab can land a tonne of pig

iron for less than A$250 in a market which

makes it for $400 a tonne.

NumbersJames calls the figures released in the Ruoni Flats

Resource Statement, “a significant milestone.

We’ve been able to demonstrate that we’re truly

a world-class iron project.”


Having gone beyond target consistently, Bao-

bab finds itself in the enviable position that any

further resource definition would be “academic,”

says James.

“We have the resource to support a very

large operation over a significant mine life,”

explains James. “What we need now is to focus

on is moving those resources from inferred to

indicated; we’ve done a lot of drilling on that

already this year.”

To that end the company has three re-

source upgrades statements coming up in

January and February of 2013 and drilling

programs also set for 2013 to focus on moving

what will account for the first approximately 10

years of mine life into the measured category.

The work being done for the pre-feasibility

study is coming to a close with a draft due by

Christmas and an announcement planned for

early in 2013.


The FutureNot only is the future bright, it’s “coming on

with a roar,” says James. The next 18 months

will see a complete definitive feasibility study,

scheduled to commence immediately after the

PFS is announced. even while this work is car-

ried out other programs, such as an environ-

mental baseline study will be conducted. “It’s

an exciting future and one that Baobab is very

proud to be involved with.”

The next step for Baobab is the search for a

strategic partner to raise the capital expenditure

required to be able to move those projects into

production. “I think we would also really benefit

from an industry partner particularly from the

steel end of the industry,” adds James.

To that end Baobab will be launching a partner

search, with PFS in hand. “We will be actively

searching for the right partner as we get this

project into production. We won’t have to look

too far for the right candidate.”

www.BaoBaBResouRces.coM

The market fundamentals for pig iron are strong, with increasing urbanisation and a worldwide decrease in the quality of scrap iron driving demand.

as seeN IN THe FeBRuaRY 2013 Issue oF THe aFRIcaN BusINess JouRNaL

GEORGE MEDIANETWORK

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BaoBaB ResouR ces · T +27 (0) 18 788 6349 F +27 (0) ... The work being done for the pre-feasibility study is coming to a close with a draft due ... mental baseline study will be