Scoping Study Indicates Significant Economic Potential for the Sanaga Iron Ore Project, Cameroon

12 May 2017

Scoping Study Indicates Significant Economic Potential for the Sanaga Iron Ore Project, Cameroon

Premium Quality 69% Fe Concentrate Product Deliverable With Low Capital Requirements And A Short Pathway To Production


West African Minerals Corporation (AIM: WAFM) announces the details of its recently completed scoping study on the Sanaga Iron Ore Project ("Sanaga Project") located near the Port of Douala, Cameroon ("Scoping Study"). The Scoping Study indicates robust economics and favourable capital and operating cost fundamentals for an open pit iron ore mine and concentrator using transportation to the Cameroon coast either by barging down the Sanaga River and transhipping at sea or using a slurry pipeline to a port in the vicinity of Yoyo. The Sanaga deposit contains previously released CIM compliant mineral resources of 82.9 Mt @ 32.1% Fe (as announced on 5 February 2015). The Sanaga Project is situated in coastal Cameroon, 70km from the Atlantic Ocean, with access to existing road and power infrastructure.


The Scoping Study was prepared by independent consultants, Royal HaskoningDHV ("RHDHV"), in accordance with The JORC Code (2012).



The Scoping Study base case is stated on pre-tax and royalty basis assuming 100% project ownership and using 5-year historical average iron ore prices. All amounts are in US dollars.

·           Two project options identified to transport product into seagoing vessels; Barging or slurry pipeline

·           NPV10 of US$262-292m*

·           IRR of 29-37%* with 29-46 month payback on capital costs

·           Upfront capital costs US$194-298m (depending on transport option i.e. barge or slurry pipeline)

·           Production of 2.4Mtpa premium grade (69% Fe) concentrate

·           Current study life of mine of 16-17 years

·           Life of mine strip ratio 1.48

·           24 months to full production from final investment decision

(* Based on long term forecast of 69% concentrate (CFR China) of US$112/ tonne)



Gerard Holden, Chairman of WAFM commented: 


"WAFM is very pleased to announce the results of an independent Scoping Study which has identified two potential pathways to production of 2.4 million tonnes per annum of premium grade iron ore concentrate.


The geometry of the mineralisation, which outcrops at surface, lends itself to low cost, low stripping ratio open pit mining.  Metallurgical testing on the primary magnetite ores indicate that the project can produce a high-quality iron ore concentrate product (69% Fe) that will command a premium price in the market place.  The Sanaga Project's proximity to the ocean and access to existing road and power infrastructure allows low capital expenditures and a short timeframe to develop export infrastructure.


These advantages are borne out by the robust project fundamentals and attractive economics demonstrated by the study.


Sanaga represents an opportunity to develop a low capital intensity project with short pathway to cash flow. On-going feasibility work and engagement with regulators and stakeholders is planned as the next steps to advance the project."




The Sanaga Mineral Resource is classified into the Inferred category in accordance with 2010 Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards and, subsequently, to JORC Standards. Table 1 below sets out the Sanaga Inferred Mineral Resource at a 25% Fe cut-off as at 19 January 2015 (as announced on 5 February 2015):


Table 1:  Sanaga Inferred Mineral Resource (by Mineralisation Domain) at a 25% cut-off


Mineralisation Domain













Oxidised Cap







Magnetite gneiss







Total Inferred Mineral Resource









(1)        Mineral Resources which are not Mineral Reserves have no demonstrated economic viability.

(2)        The effective date of the Mineral Resource is 19 January 2015.

(3)        Mineral Resources for Sanaga have been classified according to The Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves (2010).

(4)        The iron grades presented represent total iron. The proportion of recoverable iron is yet to be quantified but petrographic and metallurgical studies suggest minimal contribution to the total iron content from iron-bearing silicate minerals

(5)        WAFM has a 100 per cent. interest in the Sanaga license.  Accordingly, the Gross and Net Attributable Inferred Mineral Resource are the same. WAFM is the Operator of the Sanaga Project.

(6)        Source: The Inferred Mineral Resource Estimate was prepared by independent consultants, The MSA Group, as announced by the Company on 5 February 2015.


A preliminary pit optimisation exercise was conducted by RHDHV using Whittle to estimate the probable size of the pit to determine an economic life of mine. No cut-off was applied to the Fe values for the optimisation. WAFM believes there is significant potential to expand the Mineral resource with additional exploration. Table 2 below sets out the open pit Whittle optimisation results:


Table 2:  Open Pit Whittle Optimisation Results



Ave. grade

Strip Ratio



17 years

29.1% Fe


103 Mt

153 Mt


Note: Source - RHDHV Scoping Study


Based on previous metallurgical test work (as announced on 21 October 2014), processing flowsheet and equipment design was conducted to produce 2.4Mtpa premium grade (69% Fe) concentrate.

The Scoping Study identified two viable options for the transport of the product from Sanaga to the sea, namely:


·     Barging Option: Truck from Sanaga mine site to Edea, barge down the Sanaga River and tranship concentrate into sea going vessels. This option has a lower capital requirement (US$194 Million) and higher operating cost (US$83.2/tonne, CFR China); or


·     Pipeline Option: Pipeline the Fe concentrate from the mine site to a new port in the vicinity of Yoyo. This option has a higher capital cost requirement (US$298 Million) but lower operating costs (US$76.6/tonne, CFR China)




Over the past ten years, the price of 62 % iron ore fines has varied widely between US$ 38/t and US$ 192/t and has averaged US$ 111/t. In this context, RHDHV considers that the appropriate price is a forecast based on a "through the cycle" price (as captured by the 5-year average which includes periods of both strong and weak market conditions). Over the past five years the price has averaged US$ 94/t and this 5-year historic average forms the basis for the price forecasts used in the Scoping Study, adjusted for the respective premium that high grade concentrate commands as discussed below.

Globally, the bulk of iron ore fines/concentrate production falls between 58 % and 66 % Fe. Only a few smaller mines, and some larger mines in minor volumes, are able to produce and sell concentrate with an iron content above 66 % Fe. Sanaga has the potential to produce a premium 69% Fe concentrate product.


There are two key markets for high grade (>67.5 %) feed as potentially will be produced by Sanaga: As input material for DRI pellets and as high grade sweetener in blast furnace pellets. Buyers of both products readily pay a premium for higher grade product as it significantly reduces their own operating costs and can be blended with lower grade concentrates to improve furnace yields.


Since Metal Bulletin began tracking the historic premiums applicable to high grade iron ore concentrate (66 % CFR China) in September 2012, the premium of 66 % concentrate over 62 % fines has averaged US$ 11.56/t or 15 % of the iron ore price. Over the last three years the premium has risen to 17 % (US$ 11.68/t) and it currently stands at 22 % (US$ 19/t). Table 3 below sets out the historic and forecast pricing of high grade iron ore concentrates:



Table 3: Historic and Forecast Pricing of High Grade Iron Ore Concentrate



5-year Average

10-Year average

Long Term Forecast

62% iron ore fines (CFR China)




66% concentrate (CFR China)




69% concentrate (CFR China)






(i)            Source - RHDHV Scoping Study.

(ii)           Long term forecast refers to the average forecast price from 2020 onwards in real terms and are based on Broadhurst Mining Research Forecasts based on historic averages adjusted for expected grade of Sanaga product.


RHDHV have therefore used a long-term forecast (2020 onwards) for 69 % iron ore concentrate (CFR China) in the Scoping Study of US$ 112/t based on the 5-year historic average for 66 % concentrate (CFR China) extrapolated to 69 % quality (assuming straight line extension of the dollar price premium per % increase in iron content from 66 % to 69 %). While the spot price is currently below this level, the period considered in this study is from 2020 onwards and the long-term average is considered a more appropriate forecast.



Due to the level of uncertainty around the final project structure, the financial analysis in the Scoping Study has been undertaken only on a pre-tax and royalty basis. The Cameroon Government is entitled to a 5% royalty on revenues and a 10% free carried interest in the Sanaga Project, while the corporate tax rate in Cameroon is currently 33%.


Final agreements on taxes, royalties and free carry would be concluded with Cameroon Government during the negotiation of the Mining Convention, which defines the fiscal rights and responsibilities of both the government and the holder with respect to the operation of the Mining Licence.



The Scoping Study is based on a tried and tested mining method, an appropriate concentrator plant to produce a marketable concentrate product and examined for two trans-Cameroon options, being the combination of road and barge or pipeline, of transporting the concentrate from the mine site to the coast. The financial outcome of the study shows that the orebody is economically viable as set out in Table 4 below:


Table 4: Summary of Financial Outputs for Options



Discount Rate

Barging Option

Pipeline Option

















Upfront Capital








Payback (months)




Project Life


16 years

17 years

Operating cost per tonne mined (US$/t, CFR China)




Operating cost per RoM ore tonne mined (US$/t, CFR China)




Operating cost per Concentrate tonne (US$/t, CFR China)





Note: Source - RHDHV Scoping Study



The Scoping Study has successfully defined WAFM's preferred mining and processing plans, throughput rate, project life, and infrastructure requirements to support the intended production and logistics profile of the Sanaga Project. The results of the Scoping Study have determined the expected timeline, capital expenditure requirements and operating costs for the Sanaga Project. The advantages of the Sanaga Project's proximity to the coast, access to existing infrastructure, favourable metallurgy and potential premium product allow for the potential development of a mine requiring relatively low capital investment with a short path to cashflow and attractive operating margins.


WAFM plans to continue with feasibility work and engage with Cameroon Government regulators to advance the Sanaga project towards a Mining License and conclusion of a Mining Convention.



Graeme Michael Cox, has reviewed and approved the information contained in this announcement in his capacity as a Qualified Person as required under the AIM rules. Mr. Cox is a mining engineer (BSc. Mining Eng. Wits - 1985) and is a member of the South African Institute for Mining and Metallurgy and currently serves as Manager Consulting of Royal HaskoningDHV Mining Africa.

Royal HaskoningDHV has reviewed the information contained in this announcement that relates to or is extracted from the information contained in the Scoping Study, and confirms that the summary information presented in this announcement is not misleading and it is accurate, balanced and complete and not inconsistent with the Scoping Study.


Forward Looking Statements:

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.



West African Minerals Corporation

Gerard Holden

+44 (0)1624 639396

Beaumont Cornish (Nominated Advisor)

Roland Cornish / Michael Cornish

+44 (0)20 7628 3396

Beaufort Securities Limited (Broker)

Jon Belliss

+44 (0)20 7382 8300


A copy of this announcement, including explanatory figures and charts, will be available on the Group's website at

About West African Minerals Corporation

West African Minerals Corporation ((AIM: WAFM) is an iron ore mining and exploration group which has built a portfolio of iron ore assets. Through its 100 % owned subsidiary Compagnie Minière du Cameroun SA, the Group owns exploration licenses spanning the coastal regions in proximity to existing and developing ports, to licenses in the southeast along the extensive iron ore corridor that hosts other advanced deposits.


Further information on the Group is available at


Glossary of terms


Chemical symbol for aluminium oxide


Cost and freight (seller required to arrange for the carriage of goods by sea to a port of destination and provide the buyer)


The Canadian Institute of Mining, Metallurgy and Petroleum


Directly reduced iron, so called sponge iron, is produced from the direct reduction of iron ore (in the form of lumps, pellets or fines) to iron by a reducing gas or elementary carbon produced from natural gas or coal.


Chemical symbol for iron.


The principal ore mineral of iron with the chemical formula Fe2O3.

Inferred Mineral Resource

An Inferred Mineral Resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity.


Internal rate of return


Loss on ignition.  A test designed to measure the amount of moisture or impurities lost when a sample is ignited during analysis


One of the most common iron minerals and an important ore of iron with the chemical formula. Fe3O4

Magnetite gneiss

Metamorphic rock with a distinctive layered texture due to the discontinuous segregation of quartzo-feldspathic and ferromagnesian minerals. Magnetite can form up to 50% in this iron-rich variety of gneiss.


The concentration of metals and their chemical compounds within a body of rock.


Million tonnes


Net Present Value calculated using a discount rate of 10%

Oxidised cap

The uppermost, oxidised portion of the underlying magnetite gneiss bedrock characterised by oxidation of magnetite to hematite.  These caps are common in tropical environments where tropical weathering results in deep oxidation and leaching of rocks exposed at surface.


Chemical symbol for phosphorus

Reverse circulation drilling (RC)

A drilling method that utilizes a large rotary drill and air compressor to collect rock samples quickly and efficiently. The high speed and low cost of RC drilling makes it an ideal method for obtaining mineral samples.




Return on capital employed


Silicon dioxide, also known as silica, is a chemical compound that is an oxide of silicon

Strip Ratio

Ratio of the volume of overburden (or waste material) required to be handled in order to extract some tonnage of ore


Tonnes per annum


Mining software used to optimise open pit designs




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