Baobab Resources latest drilling results underline the quality and scale of its iron ore project in the Tete region of Mozambique.
The data from the Ruoni South deposit returned some significant drill intercepts including one 136 meter section at 32% iron ore giving a Davis Tube Recovery grade of 64%. Also contained in this sample were 1% vanadium oxide and 5% titanium dioxide. The Tete project splits into two distinct parts the Singore area and directly to the north of this, the Massamba Group.
Massamba can then be split into a number of target areas Chitongue Grande, Chimbala the Tenge-Ruoni prospect and finally the rather blandly named South Zone.
The company said a JORC resource estimates for Ruoni and Chitongue Grande Extensions are nearing completion with Ruoni South expected by the end of November.
Mr Ben James Chief executive of Baobab Resources said "The latest round of Ruoni South Davis Tube Recovery results underlines the quality and potential scale of the deposit.
He said that “Baobab will be keeping investors up to date as additional results become available."
The company said it is confident of lifting this figure to 300 million tonnes by the year end significant milestone in terms of the project economics.
Drilling is progressing steadily on the Tenge prospect which is reported to have outlined substantial zones of strong mineralisation. First analytical results are expected during December.
Baobab has drilled close to 40,000 metres so far this year and will probably finish up at around 50,000 metres by the end of 2011. To achieve these rates of productivity, the company has had up to eight rigs turning across the project.
Separately Baobab said the compilation of a scoping study on the project is at an advanced stage with preliminary results expected in the latter half of November. The plan in the next three and a half to four years is to create an operation that will initially export magnetite and an increasingly more profitable ilmenite concentrate.
It will then move into the production of pig iron using well established rotary hearth furnace technology successfully employed in South Africa and New Zealand. The capital costs of such a project are substantial at anywhere between USD 500 million to USD 750 million but off-set by the staggering revenue potential of pig iron, magnetite and ilmenite concentrate production.
When compared to some of the iron ore projects planned for West Africa that requires a huge investment in infrastructure, Baobab Tete project looks much more affordable. Baobab has cash in the bank to see them through to year end and beyond with plenty of funding options going forward including an untapped USD 23 million equity drawdown facility.
Investors have been treated to a roller coaster ride this year as the stock topped 50 pence in the spring. It is trading at 20 pence valuing Baobab at just GBP 38 million.
(Sourced from www.proactiveinvestors.com.au)
