Chinese pour money into Guinea iron venture

[miningmx.com] — NEWLY LISTED Bellzone Mining struck a binding memorandum of understanding with China International Fund (CIF) to build $2.7bn-worth of transport infrastructure in exchange for a full off-take agreement from Bellzone’s iron ore project in Guinea.

Bellzone, which began trading on London’s AIM in April, has the Kalia prospect in Guinea. Kalia has an inferred JORC-compliant magnetite resource of 2.4 billion tonnes and it has the potential to host more than 13 billion tonnes of magnetite and 2.9 billion tonnes of oxide ore. Bellzone will release a JORC oxide resource in December this year.

Bellzone has said it intends building a 20 million tonnes per annum (mtpa) mine by 2014 and 50 mtpa by 2018. The key to unlocking that deposit is getting it nearly 300 km to the port.

CIF will fund the entire infrastructure needed for the Kalia project, including the 286km railway, rolling stock, storage facilities, port and port loading equipment to transport a minimum 50 mtpa.

Nik Zuks, the MD of Bellzone, told Miningmx securing the infrastructure side of the project could advance the first production target by some months into the second half of 2013 and bring forward “significantly’ the second timeline on the 50 mtpa production target.

The railway and port will be built to handle capacity of around 110 mtpa, which gives Bellzone space to grow production at its Kalia mine as well as further capacity from the Kalia 2 prospect, half of which will go to CIF, and the Faranah prospect, which will be handed over entirely to CIF.

There are other mining groups to the east with iron ore prospects and other minerals like bauxite, the raw material used in the manufacture of aluminium. There are big names like BHP Billiton, Vale, Rio Tinto. This railway line could well serve to open those deposits.

The Guinea government, keen to have a railway into the interior, said this would unlock the West African nation’s iron ore potential. “It puts two mines on line within four years instead of one and multiplies annual mining revenue tenfold in a short time. It’s historical and transformational,’ said Mahmoud Thiam, minister of mines and geology.