Ferrex has revealed a positive scoping study update from its 74% owned Malelane iron ore project in the prospective Mpumalanga Province of South Africa. The project has direct access to the port of Maputo in Mozambique.

Mr Dave Reeves MD of Ferrex said that "The updated scoping study has significantly enhanced the commerciality of Malelane as a potential producing asset and is in line with the company's strategy of targeting low capital projects. This update also highlights the significant benefits of simplifying the process route via DMS and has resulted in a 25% increase in IRR whilst more than halving capital costs, and further reducing the already impressive capital intensity figures for the project. Whilst the NPV has reduced, the increase in the IRR of the project delivers a better return to shareholders.”

He said "We are focussed on creating minimal dilution to shareholders where possible, and with an estimated total capital cost of USD 139 million, it is now potentially feasible for the company to fund a large portion of the development of this project with anticipated cashflows from its proposed Nayega manganese development in Togo which is targeted to go into production towards the end of 2013.”

He added "Work will now focus on finalising the fines process route in order to further improve economics and overall yield. With this in mind we look forward to updating shareholders further as we progress Malelane up the development curve and towards production."

Source - Stock MarketWire

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