SOUTH AFRICA ON THE BACK BURNER Report by Lionel Williams In its ongoing drive for near-term production, Ferrex plc – an AIM-quoted iron ore and manganese development company focused on Africa – has gone for a dramatic and deliberate change in strategy, fast-tracking its iron ore project in West Africa at the expense of placing its South African iron ore operation on the back burner. disruption on the labour front are going to frighten more investors away.” In short: AIM-quoted iron ore and manganese development company Ferrex plc has gone for a dramatic and deliberate change in strategy, fast-tracking its iron ore project in West Africa at the expense of placing its South African iron ore operation on the back burner. S o says Ferrex managing director Dave Reeves, whose company has an 82% interest in the Mebaga iron ore project in northern Gabon through its holding in Gabonese company Ressources Equatoriales SARL (Equatorial). Equatorial has been granted the 309sq km Ngama exploration licence that covers the high grade Mebaga iron ore deposit. The current Ferrex portfolio comprises three other projects, including iron ore and manganese operations in South Africa and a manganese mine in Togo, all of which offer the potential for significant near-term value uplift. The company’s growth strategy is centred on advancing its current assets; developing resource projects across Africa; and on expanding its portfolio through acquisitions to build Ferrex into a mid-tier, low-cost producer of iron and manganese, primarily for the steel industry. Obviously with the disturbances, labour unrest and violence in the mining industry in South Africa over the past year to 18 months, it’s not been the flavour of the month for investors, even though they might like the project itself. “In a nutshell,” Reeves concludes, “the situation as we see it is that there’s a lot more confidence towards West Africa than there is towards South Africa” So Ferrex’s priority now is West Africa. “Our objective with Mebaga is to complete our bankable feasibility study by the end of 2014 and to move into development at that time. This would involve about six months, which means possible production by late 2015 or early 2016. Ferrex managing director Dave Reeves. “We would like to start at a production rate of 1Mtpa, and to expand that over time as we find more resources. Looking ahead, there are definite possibilities for further future expansion, but for the moment we will focus on getting the project up and running; then as we find more resources we’ll look at growth. “We are fast-tracking the project because the Mebaga iron ore licence has the potential to be transformational for Ferrex, particularly with the presence of high-grade DSO iron ore mineralisation on site,” he says. “To be quite frank,” says Reeves, given the current investment climate in South Africa, we see more value coming out of our projects in Togo and Gabon, so Malelane is on the back burner. But we will certainly push the South African project again when the timing is right.” “It’s really a shame,” Reeves continues – “South Africa has the resources, the skills and the infrastructure, but it desperately needs the stability which is vital to ensure the sustainability of the country’s mining industry. The situation is not good now, and the prospects of further Map of Togo showing Nayega in the north and the port of Lome in the south ISSUE 11 2013 MINING REVIEW AFRICA 65 GABON FERREX CHOOSES WEST AFRICA