[miningmx.com] — PETMIN’S Canadian pig iron project is shaping up as
the company’s preferred development play for further advancement, with the group
setting aside some R90m next year to increase its stake and taking the venture
forward.
Posting annual results to end-June on Wednesday, Petmin COO Bradley Doig said the
company would in the new financial year spend around R295m on capital and
development costs, of which some R205m would go towards its flagship Somkhele
anthracite mine in KwaZulu-Natal. The remaining part would go towards North Atlantic
Iron Corporation (NAIC), the Canadian pig iron project of which Petmin holds a 22.5%
stake.
Petmin’s focus is on commodities required for steel making and infrastructure
development and has recently sold its SamQuarz silica mine for R281m on the basis
that the asset didn’t fit with this strategy.
The company has so far invested $11m for its shareholding in NAIC and has an earn-
in option to acquire up to 40% for a total of $25m, plus a further option to buy an
additional 9.9% at a market related price.
According to Doig, the scale of the current resource at NAIC indicates that it should
support multiple plants producing 500,000 tonnes of pig iron annually into a 70- to 80-
million metric tonnes market. The next step is to complete a smelt test by the end of
the first quarter of 2013, together with the undertaking of a preliminary economic
assessment and pre-feasibility study.
As for the Somkhele anthracite mine, Petmin plans to construct a new plant aimed to
process discard coal for the energy market. During the past financial year, the
company has doubled the mine’s production capacity following the commissioning of a
second wash plant, with annual production capacity now exceeding 1.2 million tonnes.
Doig said the group anticipated selling 900,000 tonnes in 2013, some 300,000 tonnes
less than capacity as a result of a depressed market. Capital expenditure is
earmarked to be R95m, for the construction of the discard plant and exploration, and
R110m on development costs. Once completed, the new plant would add some
480,000 tonnes of output.
Apart from NAIC and Somkhele, the company holds a 50% stake in the Mt Ginka iron
ore project in Liberia, a 10.1% holding in the Red Crescent Resources/Sivas copper
asset in Turkey, as well as a stake in the Veremo pig iron project in Mpumalanga.
Exploration results at Red Crescent have not lived up to expectations, resulting in
Petmin writing off the value of its holding in the project.
The shareholders in Veremo are awaiting the outcome of a mining right application
while a detailed bank feasibility study is being completed.
As for Mt Ginka in Liberia, Petmin said the initial exploration results were satisfactory
but that the company would spread itself too thin to spend significantly more capital
on the project.
“Petmin and its joint venture partners are considering their options to merge Iron Bird
(holding company) with a larger iron ore company to sell the investment in the .
project.’
