Sable Mining clinches Liberia rail deal

[miningmx.com] – SABLE Mining, the UK-listed iron ore development company, said it had signed an agreement with Liberia allowing it to transport iron ore through the country from the firm’s Guinea-based project.

The agreement allows Sable Mining to move iron ore to Liberia’s Port of Buchanan on the Yekepa rail link which runs only 30km from the firm’s project. In return, Sable will undertake rehabilitation and expansion of the line.

According to Sable Mining CEO, Andrew Groves, the agreement will allow the company to reduce capital expenditure on the project. Investec Securities said Sable would spend $1.3bn over the life of mine of which $300m will be in the first five years of the project.

In terms of the 25-year deal, Sable will pay the Liberian government a $250,000 ‘signature fee’ and make a $2.5m annual contribution to a social fund. Between $1.5m and $5m will be paid in concession fees when material is transported on the line.

Sable Mining is building the Nimba mine in southeast Guinea which contains an estimated 178 million tonnes of iron ore. The rail agreement follows granting of a mining licence and export decree last year.

“On a project specific basis, the use of Liberian based infrastructure for export means that, compared to its peer group, Nimba’s capex requirement is greatly reduced,” said Groves who added that it had significant for the entire region.

“The significance of the IDA will be felt across the West African region, as it paves the way for the development of Nimba which, when in production, will generate significant revenue, employment opportunities and tax income,” said Groves.

Investec Securities believed the rail agreement was “a major step”, but added it was “very tough” building iron ore projects in the current market following the 46% decline in the price of iron ore last year.