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BFS Infrastructure Process Update, South Africa
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company in the
Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
ISIN: AU000000WRL8
28 April 2015
Ferrum Crescent Limited
("Ferrum Crescent", the "Company" or the "Group")(ASX: FCR, AIM: FCR, JSE: FCR)
BFS Infrastructure Process Update, South Africa
Highlights
- Detail disclosed on infrastructure suppliers (power, water, rail and port)
- Infrastructure work moving forward following work completed since BFS
recommencement in Q4 2014
- Domestic steel supply study underway as part of new infrastructure planning with
relevant parties
Ferrum Crescent, the direct reduction iron (DR) pellet project developer, in accordance with
best practice disclosure, today announces details of recent progress made with regards to
progressing infrastructure negotiations for the Moonlight DR grade iron pellet complex
located in Limpopo Province, South Africa. At this time certain elements of the Company’s
collaborative efforts with infrastructure providers remain commercially sensitive but an
update will be made to the market when appropriate.
The principal reasons why the Company recommenced the Moonlight bankable feasibility
study (BFS) in Q4 2014 were that the global iron ore market is demonstrating more and
more that high grade pelletised products attract a significant premium (with the corollary
that lower quality products suffer from a significant discount) and that a mine start schedule
of 2019 fits in well with local infrastructure expansion schedules.
Ferrum Crescent is currently undertaking the BFS as part of the development of the
Moonlight Iron Project in South Africa. Following recent advances in the BFS, such as
confirming the open pit location, the Company has been able to progress negotiations
regarding project development with a series of parties, including infrastructure providers.
The Moonlight Deposit, which is located some 3.5 hours by road from Johannesburg, is
located in a region able to offer an almost complete infrastructure ‘solution’ for the Project
with the Thabazimbi railhead located 220 kilometres away from the mine following the
proposed slurry pipeline route and power, water and port infrastructure all established and
being augmented by the relevant South African Government bodies. The Company is
currently working with a series of relevant parties including regulatory authorities and
National and Provincial Governments. The Company is also undertaking community
engagement work in order to ensure it meets all requirements under South African law
regarding employment and social contribution. Below is an outline of infrastructure analysis
for the Moonlight Iron Project undertaken by the Company.
Road During the mine and DR complex build, public road access can be utilised to deliver materials and
services to the relevant sites. Ferrum Crescent continues to benefit from the Department of
Transport’s upgrade of the N11 highway, 8km north of the project, which is a major arterial route
to the coast
Rail In view of the forecast for future increased demand for coal from the undeveloped Waterberg
coalfields to feed Eskom’s power stations in Mpumalanga, Transnet Freight Rail (TFR) has
commenced with a rail infrastructure upgrade project, which will be implemented in 4 stages.
During a recent meeting with Transnet in March 2015, the following information was provided to
Ferrum Crescent.
Stage 1 Completed. This was for the construction of a passing loop at Matlabas to enable 100
wagon trains to pass between Lephalale and Thabazimbi.
Stage 2 Expansion to 6Mtpa will involve increasing the current capacity on the Lephalale -
Thabazimbi – Pyramid South line. The expansion will increase the capacity from Thabazimbi to
Ermelo to 6Mtpa. Construction is expected to commence in June 2015 and completion by June
2016.
Stage 3 Expansion will increase capacity from Thabazimbi to Ermelo to 12.6Mtpa. A detailed
study is in progress and construction is expected to commence in April 2016 with completion by
December 2017.
Stage 4 Expansion will increase capacity from Thabazimbi to Ermelo to 24Mtpa. Construction is
expected to commence in June 2018 with completion by June 2020. In addition to the
abovementioned expansions of existing facilities, TFR is also conducting a prefeasibility study for
a new heavy haul line from Thabazimbi to Ermelo. Should this project go ahead, it would
introduce additional capacity of 30Mtpa, which would be available from 2024 onwards.
TFR is also planning to increase the capacity of the Richards Bay line from the current 72Mpta to
81Mtpa by 2018. A further expansion to 97Mtpa is expected by 2020.
With the recent announcement that operations at the Thabazimbi Iron Ore mine will be
suspended, this will free-up some capacity on the Thabazimbi line (previously 3Mtpa). Transnet
Freight Rail Chief Executive Officer Siyabonga Gama has publicly stated that re-building freight
capacity on the regional network is key for future development.
Once the Moonlight Iron Project BFS production figures are confirmed, Ferrum Crescent will
finalise the application for the required rail capacity.
Port- The Richards Bay port is currently the most suitable port available to Ferrum Crescent, for product
Richards to be sold overseas.
Bay
The port has a number of terminals for the export of a range of commodities. The Dry Bulk
Terminal is operated by Transnet Port Terminals (TPT) and handles the export of dry bulk
commodities including magnetite and other similar concentrates. The Multi-Purpose Terminal
handles various general/break bulk commodities including ferro chrome, pig iron and steel/iron
products. This terminal is intended to be expanded in phases, progressively increasing capacity
from 22.6Mtpa to 60.5Mtpa by 2040.
The Richards Bay Navitrade Terminal is a joint venture between Grinrod Terminals and RBT
Resources. The capacity of the terminal is intended to be increased from the current 6Mtpa to
20Mtpa to accommodate the production output from small to medium sized companies. The
Grinrod Terminal terminal currently handles coal, sulphur, fertiliser, pig iron and heavy minerals.
During the course of the BFS, Ferrum Crescent will provide TPT with details of the production
output and timing from the Moonlight project and enter into negotiations for port allocations.
Power The Medupi power station is located in Lephalale and is the nearest source of power supply for
Supply the project. Medupi is being constructed and will comprise 6 x 800MW units with 4800MW
installed capacity. Boiler synchronisation of the first unit and connection to the grid are currently
underway. The other 5 units will come on line at 8 month intervals. The estimated power
requirement for Moonlight is between 110- 120 MW.
Although a service request was previously submitted, Eskom advised that it would not be able to
provide these requirements until early 2017 when the 3rd unit at Medupi is on line. The power
supply to the mine and distribution will require construction of a dedicated 132kv line directly
from Medupi to the mine.
During the BFS, consideration will also be given to the potential of self-generation options. Once
the final power requirements are determined during the BFS, the service request will be updated
and resubmitted to Eskom.
Water Potential sources of water supply for the Moonlight Iron Project include the Mokolo and
Crocodile River Water Augmentation projects (MCWAP 1 and 2) or direct extraction from the
Crocodile River. In addition to the above, other options would include water supply from the
Limpopo or Lephalala Rivers by transfer of water allocations through purchases or leases. Artificial
recharge facilities along the Limpopo and or Lephalala rivers might also be a consideration.
A presentation by the relevant government department was made to the Fossil Fuel Foundation
in October 2014 and the following updates on the MCWAP projects were provided:
MCWAP 1 : Will include a pipeline and pumping station from Mokolo Dam to Lephalale area. This
project will supply the needs of Medupi and Matimba power stations, Exxaro and for domestic
growth in the Lephalale municipality. On completion, MCWAP 1 will provide 30.5 million cubic
metres of water per annum. The expected completion date for the project is by end of October
2015.
MCWAP 2 : Will include an extraction facility and pumping station on the Crocodile River(West)
near Thabazimbi and a pipeline to Steenbokpan and Lephalale (distance of 128 Km). The
construction contract is expected to be awarded by December 2016.
Water delivery is expected to be by November 2020. On completion of the project, MCWAP 2 will
provide 100 million cubic metres of water per annum.
The DWA is also considering a further water augmentation project which will involve a transfer
scheme from Johannesburg’s Klip River waste water treatment works to the head waters of the
Crocodile River. This project will only be considered if the MCWAP 2 project does not yield
sufficient supply. During the PFS Phase of the project, an independent water supply study was
carried out by Metago/SLR Consulting. This addressed possible water sources from the areas
surrounding the mine.
During the BFS, this study will be updated.
Ferrum Crescent will continue to engage with the DWA during the BFS regarding water allocations
for the project.
As an adjunct to the rail and port work, Ferrum Crescent is also continuing analysis of
domestic South African supply routes for its proposed DR hub at Thabazimbi. The Company
is working with a number of groups to look at providing long term support to the domestic
South African industry as historic feedstock uses cease to become economic. If such a
pathway were finalised, the need for export via Richards Bay might be excluded from the
BFS model.
Commenting today Tom Revy, Managing Director, said: “Following the start of work in Q4
2014 the BFS and corporate activity have escalated significantly, and the Board believes it is
appropriate now to announce to the market more detailed levels of information on our
infrastructure development. This work is actively forming the basis of progressing the
Moonlight BFS on a number of fronts and I look forward to announcing a further update to
the market shortly.”
For more information on the Company, please visit that website or contact:
Australia enquiries: UK enquiries:
Ferrum Crescent Limited Ferrum Crescent Limited
Tom Revy T: +61 8 9367 5681 Laurence Read (UK representative)
Managing Director T: +44 7557672432
RFC Ambrian Limited (Nominated Adviser)
Andrew Thomson/Oliver Morse
T: +61 8 9480 2500
Beaufort Securities (Broker)
Elliot Hance
+44 (0)20 7382 8416
South Africa enquiries: JSE Sponsor
Bravura Capital (Pty) Ltd
Doné Hattingh
T (direct): +27 11 459 5037
Notes to Editors
Ferrum Crescent’s principal project is the Moonlight Iron Project located in Limpopo Province in the
north of South Africa. The Moonlight Deposit (upon which the Moonlight Iron Project or "Moonlight"
or the "Project" is based) is a magnetite deposit located on the farms Moonlight, Gouda Fontein and
Julietta and is the main operational focus for the Company. Iscor, which explored the Project in the
1980s and '90s, reported mineralisation, capable of producing a concentrate grading 68.7% iron. At
the time, Iscor concluded that the deposit, which was described as comparable to the world's best,
was easily mineable due to its low waste-to-ore ratio. The beneficiation attributes of Moonlight ore
are extremely impressive, with low-intensity magnetic separation considered suitable for optimum
concentration.
Metallurgical tests of Moonlight material, undertaken since by Ferrum, suggest that Iscor's results
are conservative, that good metal recoveries can be achieved, and that the resulting concentrates
have a high iron content and only negligible impurities, at grind sizes considered to be the industry
standard (P80 of 75 – 125 microns).
Key features of the Project are:
- JORC (2012) compliant Mineral Resource;
- Historical drilling, drilling by the Group, geological modelling and high density geophysical
survey conducted by the Company in 2012 confirm tonnage upside potential;
- 30 year Mining Right granted;
- Environmental licence (EIA) in place for the Moonlight mining area (approved 4 April 2013);
- Metallurgical test work indicates the potential for high quality pellets in excess of 69% iron
and low deleterious elements possible (DR grade pellets for use in direct reduction
iron/electric arc steel-making processes);
- Low stripping ratio; slurry pipeline>pellet plant at rail head (Thabazimbi); export through
Richards Bay;
- Duferco offtake partner (4.5 mtpa plus first right on 1.5 mtpa if not sold domestically);
- Independent valuation 2014 – The Mineral Corporation's independent valuation of the
Project released to the market on 11 June 2014;
- Located near Kumba railhead at Thabazimbi (Kumba operation depleting in grade), Limpopo
Province, northern South Africa;
- New Eskom power (4,800MW) commissioning first 800MW module;
- Richards Bay port expansion for iron ore products.
Date: 28/04/2015 10:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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