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MODERN MINING
January 2015
MINING News
ASX-listed Magnis Resources has signed
a Memorandum of Understanding (MOU)
with China Railway 24th Bureau Group
Co, Ltd. Under the MOU, the two compa-
nies will enter into formal negotiations to
secure a contract for engineering, procure-
ment, construction and contract mining
for the Nachu graphite plant in south-east
Tanzania. The proposed value of the con-
tract is US$150 million.
Magnus says the next steps are a site
visit and negotiations for the signing of
contracts. All parties are aiming for project
to Zambia rail link. Currently, they are
working on a number of major infrastruc-
ture projects in Tanzania with over 1 000
employees in the country. CRCC has also
been involved in the construction of a
number of mining plants in Africa.
Magnis recently announced the com-
pletion of a positive PFS on the Nachu
project, based on an open-pit operation
producing 180 000 t/a of graphite con-
centrate with an average ore grade of
5,1 % graphite. The PFS put the capex at
US$171,4 million with a capital payback
period of 1,4 years. It estimated the after
tax NPV at US$1 040 million and the IRR at
84 % (at a 10 % discount rate). Operating
costs for the first three years of mine life are
projected at US$448 per tonne of product.
The plant design is based on a relatively
standard crushing, rod mill grinding and
flotation process. Several stages of regrind
and cleaner flotation have been included.
The PFS was conducted by BatteryLimits
of Perth, a specialist process engineering
and study management consultancy, in
joint venture with LogiMan, a project engi-
neering company based in Johannesburg.
The mining study, including mining cost
estimates and development of the mining
schedule, was conducted by Orelogy Group,
a Perth-based mining consultancy. The ini-
tial design work on the tailings facility and
associated volume estimates was done by
Knight Peisold, based in Johannesburg.
Nachu graphite project heads for development
The port of Mtwara, approximately 200 km from the Nachu site, has sufficient capacity to handle
exports from the project.
development commencement in 2015.
China Railway 24th Bureau Group Co,
Ltd is wholly owned by publicly listed
China Railway Construction Corporation
Limited (CRCC), which is one of the largest
integrated construction groups. It ranked
80th among the Fortune Global 500
Enterprises in 2014 and first among the
ENR Top 250 Global Contractors in 2013.
CRCC and its subsidiaries – including
China Railway 24th Bureau Group Co, Ltd
– have a long history of working through-
out Africa including on the iconic Tanzania
Kumba reviewing all aspects of its business
In a technical update issued in December
2014, Kumba says that its Sishen mine
continues to performwell against its opera-
tional plan and remains on track to increase
production to 35 Mt in 2014, 36 Mt in
2015 and 37 Mt from 2016. Regarding the
Kolomela mine, Kumba states that its life
of mine (LoM) production capacity will be
increased to 11 Mt/a from 2015. Studies are
in progress at Kolomela which could result
in increasing production further to 12 Mt in
2016 and to 13 Mt from 2017.
At Sishen, the ‘Operating Model’, which
was implemented in August 2014 at the
ore and internal waste mining opera-
tions at North mine, is already yielding
results including: improving scheduled
work to increase efficiencies; a 50 %
reduction in waiting time on shovels; and
a 23 % efficiency improvement in total
tonnes handled since June 2014.
In 2015, the OperatingModel is expected
to be rolled out to the pre-stripping opera-
tions at Sishen mine to meet ramp up
requirements, and to the Kolomela plant
to increase throughput to 13 Mt/a in the
medium term.
Kumba aims to deliver approximately
5 Mt low capex production growth, which
includes 2 Mt from Kolomela and the
remainder from Sishen.
Kumba anticipates total iron ore produc-
tion of approximately 47 Mt in 2014, 47 to
48 Mt in 2015, 48 to 50 Mt in 2016 and 48 to
50 Mt in 2017. Blended free on board (FOB)
cash costs are expected to be US$35/tonne
in 2014, US$39/tonne in 2015, US$40/tonne
in 2016 and US$41/tonne in 2017.
In the current low price environment,
which is expected to persist, Kumba is
reviewing all aspects of its business. This
includes optimising its production portfolio,
focusing on low cost production, optimally
filling the rail line capacity and assessing
Thabazimbi mine as part of the portfolio.
It also includes reviewing capital expen-
diture requirements and costs. Based on
the current review, the company is plan-
ning to reduce SIB (Stay in Business) capex
(including deferred stripping at Sishen and
Kolomela) by approximately 20 % and by a
further 10 % in 2015 and 2016 respectively
when compared to SIB capex guidance dis-
closed in the 2013 Anglo American Investor
Day presentation.
Kumba is targeting reducing exploration,
technical and project studies expenditure
by approximately 50 % and is assessing a
restructuring to deliver on the revised port-
folio, potentially reducing Head Office roles
by approximately 40 %.