Genmin delivers positive PFS for scalable iron ore mine at Baniaka

African explorer and developer Genmin (ASX: GEN) has delivered “outstanding” results from a pre-feasibility study (PFS) for its wholly-owned Baniaka iron ore project in Gabon.

The study revealed a low capital intensity of US$40 per annualised production tonne (A$59/t), resulting in an estimated 38% after-tax internal rate of return (IRR) for an initial 10-year mine life.

Baniaka’s global mineral resource estimate was increased to 760 million tonnes, representing just 18% of the interpreted 85km strike extent.

The 168Mt indicated mineral resources underpinning the PFS, made up of the detrital iron deposit (DID) and soft oxide (SO), represent only 22% of these global resources.

The PFS estimated an initial capital investment of about US$200 million (A$296 million) for a 5Mt-per-annum nameplate capacity and associated infrastructure, including full ownership of a strategic and dedicated power transmission line from Grand Poubara and a rail loadout facility connected to the Trans-Gabon Railway near Franceville.

The study also showed the potential for the operation to upscale beyond the 5Mtpa nameplate capacity to 10Mtpa “as soon as project build debt funding permits”.

The final investment decision for the project is expected in the second quarter of 2023, although pre-development works have commenced with Bond Equipment awarded a US$500,000 (A$740,000) first stage detailed design and engineering contract for the processing facility.

Compelling financial metrics

Genmin managing director and chief executive officer Joe Ariti described the financial metrics as “compelling”.

“With a modest initial capital investment, and operating hydroelectricity, rail and port infrastructure, this initial phase of monetising the province-scale Baniaka asset is highly feasible,” he said.

Mr Ariti said the company is targeting first production in mid-2024.

“To this end, we will be supporting Anglo American in finalising its due diligence and negotiating documentation in respect of debt financing and offtake, completing the social and environmental impact assessment by the end of the year, and lodging a large-scale mining permit application.”

“Concurrently, we also plan to complete several pre-development work streams like the detailed design and engineering of the processing facility that is already underway,” he added.

Baniaka iron ore mining operation

The PFS presents a maiden DID and SO probable ore reserve estimate of 101Mt to provide a run-of-mine feed for an initial 10-year mine life at a 5Mtpa production rate.

The project is proposed as a conventional, proven truck and shovel open pit mining operation with a low-risk wet scrubbing, screening and gravity separation ore treatment flowsheet.

Genmin said there would be opportunities to enhance returns including selling a separate higher value pellet feed product, as well as the plan to upscale the mine to 10Mtpa.

The company also noted the potential for significant further value to be unlocked through resource growth and exploration upside.

ESG focus

Genmin aims to maintain a strong focus on environmental, social and governance (ESG) with clean, renewable hydroelectricity, no tailings dam and up to 0.5% of gross revenue allocated to community development.

At steady state, the operation is expected to employ up to 400 people and over the life of the initial mining phase, contribute US$602 million (A$890 million) to Gabon in production royalties and corporate income tax.