JOHANNESBURG (miningweekly.com) – London-listed Bellzone Mining was on the hunt for strategic investors as it worked to lead “the new generation of iron projects in Africa” with its flagship Guinea-based Kalia mine, CEO Glenn Baldwin said on Tuesday.

The $865-million Kalia Phase 1 (KP1) openpit iron-ore project would deliver a positive return on investment on a standalone basis without the need for rail infrastructure and was a “highly attractive” development opportunity, he noted in a media roundtable in Melrose Estate.

The project would see the company hauling out seven-million tonnes of iron-ore a year for the first ten years of production – the estimated life-of-mine (LoM) of KP1 – from the second half of 2015, with the first exports scheduled for the first half of 2016.

Baldwin said KP1’s low capital expenditure (capex) and low operational expenditure (opex) offered a “robust investment opportunity”.

The capital intensity of the project would reach $14.49 per total reserve tonne and $124 per annualised tonne of dry tonnes of production and an opex of $58/t, Baldwin said. He noted that the project held up well against other planned major iron-ore developments, including Anglo American’s Minas Rio iron-ore project, in Brazil, and Rio Tinto’s Simandou project, in Guinea, with a capex of $332/t and $160/t of annual capacity and an opex of $58/t and $72/t respectively.

The project also compared well with other juniors’ projects, which held capex of between $100/t and $290/t and opex of between $48/t and $108/t.

The Kalia project, assuming shipping costs of $20/t and an average sales price of $127.70/t, would yield an internal rate of return (IRR) of 37.5% and net present value (NPV) of $1.4-billion.

“If the free-on-board (FOB) sales price achieved for the KP1 product over the LoM reduced by 25%, the NPV would still reach $566-million, with an IRR of 23%, showing that the project is robust under different economic scenarios,” Baldwin said.

The FOB operating cost for the project was said to be $34.39/t, while the break-even price was expected to be $51.71/t FOB.

The project had indicated and inferred higher-grade mineral resource of 124.2-million tonnes at 53.5% iron (Fe), with a probable reserve of 59.8-million tonnes at 54.1% Fe.

Geological work had determined a total oxide and supergene banded iron formation (BIF) resource of 913.2-million tonnes at 36.3% Fe and magnetite BIF resource of 4.72-billion tonnes at 29.3% Fe.

Discussions were now under way to secure funding for the first-phase development following the completion of an independent bankable feasibility study (BFS) last month.

The BFS showed that the mine, plant and mine site infrastructure development would cost $184-million.

The product would be transported from Kalia to the Konta port after the construction of a $379-million, 285 km stretch of new road connecting to the existing haul road from the Forécariah operations, a joint venture between Bellzone and the China International Fund.

A road-truck fleet, enabling the convoy of multiple truck-hauled double side-tipping trailers with a capacity of 75 t each, allowing a 150 t haulage per truck, and related infrastructure, including breakdown maintenance facilities mid-point along the route and truck maintenance facilities at the mine and port, would be added at a cost of $49-million.

A new dedicated bulk-handling port at Konta, designed and costed by Fluor, was estimated to cost $130-million, but there was potential to upgrade the current port at a reduced capital cost.

The development of KP1 also provided the platform for future expansion of the lower-grade oxide from Kalia Phase 2, which would extend the operation’s LoM by 15 years, as well as the large magnetite resources contained within Kalia Phase 3.

The group had sufficient cash to “spend time seeking” strategic investors until mid-2014.