Bellzone Mining's Guinea ferronickel project financially viable

25th Aug 2016 14:38

(ShareCast News) - Iron, copper and nickel explorer Bellzone Mining's technical study for its Guinea mine said ferronickel production was viable but it will cost £51m to get it started.The AIM-listed miner's Kalia mine in Guinea consists of two large iron-rich mineralised deposits and a pre-feasibility study work conducted to date shows the first phase of Kalia's development is expected to deliver a positive return on investment, ahead of the planned development of the large-scale bulk export iron ore mine.This has resulted in Bellzone committing to completing a definitive feasibility study in accordance to the Joint Ore Reserves Committee (JORC) code 2012.Ferronickel production would cost about $51m and it would produce $5,359 per annual tonne. A base case assumption of a 10% discount rate would result in a break-even price of $10,617 per tonne.Bellzone plans to achieve first ferronickel production from Kalia in the first half of 2018, with exports expected to commence shortly after production commences.The company said the ferronickel project will provide a good platform for future development of the iron ore mine, enabling Bellzone to develop on-mine infrastructure and train staff conversant with the extraction and processing of both nickel mineralisation and bulk iron ore. There is reasonable scope to expand the project through future exploration within the area.Chairman Michael Farrow, said: "We are pleased that we are now able to confirm the viability of the potential to produce a ferronickel product in reasonable quantities and that there is every possibility for an economic and profitable project. We now look forward to completing what is required to upgrade this work to a definitive feasibility study and to commence construction as soon as the financing is in place."Preliminary feedback from relevant financial institutions has been positive and we will immediately engage in detailed discussions with them to work out what needs to be done to arrive at a definitive financing decision. The path to exploiting our Kalia iron ore reserves is clear and Bellzone will move as quickly as possible to begin production in Guinea."Shares in Bellzone Mining were down 26.94% to 0.227p at 1501 BST.