Société des Mines de fer de Guinee (“SMFG”) has today announced the completion of a Study for the Phase 1 Development of Nimba Iron Ore Mine (“Nimba”), in the Guinée Forestière region of southeast Guinea.

The iron ore deposits at Nimba represent a large, high-grade resource and one of the last few known high-quality, undeveloped iron ore deposits in the world that has natural sinter feed fines, able to produce a premium direct-shipping ore (DSO) product with an average iron (Fe) grade of 65%. The Nimba Mining Concession comprises an area of 625 hectares and consists of three individual iron ore deposits with measured resources of 750 million tons (@48% Fe cut-off).

SMFG, which is 85% owned by US company High Powered Exploration Inc (“HPX”) and 15% by the Government of Guinea, has the exclusive right to mine the iron ore deposits within its concession in the Nimba mountain range close to the international borders of Liberia and Cote d’Ivoire.

A Prefeasibility Study (PFS) completed in 2021 for the Nimba Iron Ore project by Hatch South Africa (Pty) Ltd (“Hatch”) outlined plans for a fully integrated pit-to-port project configuration for a 30 million tonne per annum operation.

An updated study released this week by Hatch outlines plans for a phased development scenario, with Phase 1 based on the annual production of 2 million tons of high-grade material to be exported via the Port of Buchanan in Liberia. DSO material will be transported through Guinea on a newly built dedicated haul road and into Liberia using a fleet of 20 trucks, pending the construction of a rail line in a future planned development phase.  The total capital cost for the first phase will be circa US$108M which will form the base upon which production can be expanded up to 30 Mtpa over a 5-7 year period.

Phase 1 of the Nimba development will be a cost competitive operation, with a negligible average strip ratio over the life of mine (LOM) and producing a high-grade DSO product that does not require complex processing. Based on detailed environmental and social studies and initial impact assessment on the PFS of 2021, submission of an impact assessment will be done rapidly based on information already in the company’s possession.  Pending receipt of all government regulatory and environmental approvals, community consultation and completion of financing activities, Phase 1 of the Nimba development will take approximately 24 months to complete and commence operations.

A staged development timeline for Nimba will reduce up-front capital, whilst ensuring near-term positive cash flow and will provide a critical step in de-risking the overall project development timeline, demonstrate proof-of-concept, and establish important market supply relationships.

More importantly, Phase 1 provides significant risk mitigation opportunities, establishing an operating environment with a smaller footprint, providing additional time to source and train local people and to ensure the operational, environmental, and social management plans are fully functional and embedded before the commencement of larger operations.

Phase 1 will also provide an entry for HPX and SMFG into a very competitive market, providing valuable data and information for future customers and off-takers and positive cash flow will be used to fund the expansion of the project over time.

Approximately 700 people will be required to support the operation of Phase 1 of the Nimba development. With operations primarily in Guinea, the majority of these will be Guinean nationals. The project will also seek to maximise the participation of local supply and contracting firms in Guinea, in line with the Company’s commitment to local content and local employment. Liberian logistic operations will be coordinated between HPX and its directly owned subsidiary, Ivanhoe Liberia.

Since acquiring the Nimba project in 2019, HPX has invested approximately US$105m in completing development and environmental studies, which is in addition to US$600m of expenditure by previous owners.

HPX has commenced discussions with potential financing partners and will be completing governmental approvals processes and community consultation in parallel to allow the commencement of activities for the Phase 1 development of Nimba to proceed.

Management Comment:

Bronwyn Barnes newly appointed HPX CEO said: “We are very excited by the opportunities provided by Phase 1 development to be able to advance the project at a pace that is suitable for the current market conditions and provides us with the time to complete all required approvals in partnership with the Ministry of Mines.

We look forward to taking this important first step and building on our success in a win-win partnership with the Government of Guinea.  I sincerely appreciate the continued support of the many sectors and people within the Government of Guinea to reach this important first phase of development and look forward hopefully working collaboratively in the future to grow the project in line with our vision to be one of the new breed of iron ore producers in Guinea.”