Aquila Resources is planning advancement in its South African mining projects, namely Avontuur and Thabazimbi.

Aquila, the ASX-listed mineral exploration company, has invested more than R450 million exploring for iron ore and manganese on nine exploration tenements since coming to South Africa in 2006, writes Vicky Sidler. It has identified two major projects: Avontuur manganese project, which is focused on the Gravenhage manganese deposit, and the Thabazimbi iron ore project in Limpopo.

Aquila has been very successful in exploration in South Africa,” says Tony Poli, Aquila CEO. “We have two very sizeable and high class projects with quite a bit of direct foreign investment. We are continuing to explore our project areas for additional iron ore or manganese deposits.”

Poli added that his experiences in the South African mining industry have been pleasant and rewarding, saying that “one of the advantages of South Africa is that you already have installed infrastructure, such as rail and port.” This is essential for both South African projects, which rely heavily on a concrete agreement with Transnet.

Avontuur’s current export route is via a 1 000km rail line to Port Elizabeth, where Transnet is expanding and upgrading the logistics corridor from around 5.5Mtpa currently to ~8Mtpa by 2017 and ~16Mtpa by 2020. Existing rail and port infrastructure at Thabazimbi offers optionality via Maputo in Mozambique or Richard’s Bay.

Aquila is also working with Transnet to investigate transport of iron ore along the Waterberg coal line corridor. “We have worked quite closely with the GM of projects at Transnet who did a site visit recently,” says Poli. “Transnet is very keen for us to commit to development with them. There is clearly a lot of planning going into the project from Transnet’s side.”

Avontuur manganese project

At Avontuur, drilling was recently completed to upgrade resources and increase reserves. The current JORC-compliant resources and reserves are 147.8Mt at a grade of 38.2%Mn and 20.2Mt at a grade of 40.12%Mn, respectively. Expenditure to date is some R150 million, and development capital expenditure for an open-cut mine envisaged by a definitive feasibility study, is around US$180 million.

Average estimated production is up to 1.5Mtpa run-of-mine, comprising 1 125ktpa lumps and 330ktpa fines, with an opportunity foreseen to beneficiate the latter locally. The product has value-in-use benefits – compared to other ores, the oxide ore has relatively low slag-forming contaminants.

A number of approvals required for the development of Avontuur are already in place. Progress towards the granting of a mining right has been hampered due to an alleged overlapping prospecting right, which is currently being discussed with the Department of Mineral Resources.

Thabazimbi iron ore project

Production in Thabazimbi is still several years away, with a mining right application only recently being lodged. The project has increased its JORC-compliant resource by 19% to 80.8Mt in December last year: 75% in the measured and indicated categories. The ore is high grade (62%+ Fe) with low deleterious element levels and a high lump ratio (>65%), making it suitable for both export and domestic markets, with the opportunity to beneficiate at local steel mills.

The scoping study envisages an open-pit operation with a life of mine of 15+ years. With some R270 million already expended, initial capex (excluding pre-strip) is estimated at between US$215 million and US$300 million, depending on the final logistics solution.

A promising future

“We saw an opportunity in South Africa and decided to challenge ourselves with it,” says Poli. “There is still a lot of work to be done, but there is also clearly a lot of opportunity.”

With a current market capitalisation of about R8 billion, Aquila has cash and liquid assets in excess of R5.4 billion. Poli spoke in support of the National Development Plan and National Infrastructure Plan, pointing to completed social and labour plans for both of Aquila’s South African projects, and corporate social investment to date – ahead of any capital development – of more than R500 000, mostly on educational projects in its host communities.

Despite the challenges faced by the mining industry in South Africa, Aquila remains optimistic about its investment. “I think the market has turned a corner, and I am very excited about the future of mining,” Poli concludes. “Right now, the world is a better place for mining companies because there is a lot of opportunity.”

Additional Reading?

Request Free Copy