A perfectly-timed mineral sands project with tier 1 characteristics

When the Sabodala Gold Operation, located 650 kilometres east of Dakar in Senegal, West Africa, achieved its first gold pour back in March 2009, the big buzz around owners Mineral Deposits Limited (MDL) kicked off. The interesting part about it all is that this interest has been ongoing ever since.

MDL is an ASX and TSX-listed miner currently focusing on Senegal, West Africa, and that’s where the reason behind the ongoing flurry of attention around it is revealed. Yes, Sabodala is an impressive and successful project, but it is not MDL’s only draw. This company has another project, the Grande Côte Mineral Sands Project; a project with impressive tier 1 aspects, the only new project of this type in the world and one which is poised to hit the market at a point of supply deficit.

IRJ spoke with Nicholas Limb, MDL’s Executive Chairman, to hear more about how the company began, altered, conquered and now braces itself for development of its world-class mineral sands project.

Placing MDL

Limb explains that MDL originates under the control of BHP Billiton, the mining major who owned it for many years. In 1997, a small public company, of which Limb was Chairman, bought MDL from BHP thus making it a public company again. At this time, MDL was operating a number of mineral sands mines on the East Coast of Australia, north of Sydney.

“We continued to run those mines until the end of 2003 when the creep of national parks made it impossible to continue and we recognised that that was coming so we set about looking around the world for a place we could transfer those expertise,” Limb recalls.

“That ultimately took us to Senegal where we recognised the mineral sands project which had most of the characteristics that we had in the Australian context; a similar sort of ore body where we could transfer most of the expertise.”

Once in Senegal, MDL spotted the gold business opportunity there just as the industry was opening up. With first-mover advantage on its side, MDL was soon granted the Sabodala Gold project in the new mining area of the Birimian geological belt.

“Subsequently we turned that into a fairly large ore body. At that stage we were progressing both projects, then early in 2008, we began our construction of the gold project,” Limb says. “We then completed construction of the gold project and brought that into production and we’re about over a year into production now.”

Prior to constructing Sabodala, MDL had intended to focus on Grande Côte first. As strategic decisions owing to available human resources and market opportunity were made, this mineral sands project was deferred. Until now.

“In the last six or eight months we’ve circled back, redone the feasibility study for the Grande Côte project and we’re moving into the financing phase with the hope that we can begin construction at the end of the year,” Limb says.

With Sabodala well and truly reported on by the industry (after all, it did produce 175,000 ounces within its first year of production), now is the time to shift attention to the exciting developments at Grande Côte.

Grande Côte: Economical tier 1 potential

Grande Côte, located 100 kilometres to the Mauritanian border, is the coastline north of Dakar, a beach no less.

“Behind that beach, about three kilometres inland, you have a white sand dune system, which is beach sand blown up into sand dunes for the entire length,” Limb says. “Those sand dunes contain about two per cent of valuable heavy minerals which consist principally of ilmenite, the titanium mineral, and zircon.”

Limb adds that the initial attraction to Grande Côte sparked from its ore body’s geological similarity to those that the company had mined historically back in Australia, allowing for better understanding of how exactly to make it a viable project.

“Subsequently, we’ve spend in excess of $100 million drilling the project, many years of pilot studies, bulk samples, extensive hydrology, extensive environmental and social studies – all of those things that you need,” he says.

“At the same time we’ve done a complete detailed engineering for the project, signed a fiscal stabilisation agreement with the government and we have received all of the environmental and other permits. The project is now in a position to begin construction and we’re about to release the Definitive Feasibility Study (DFS).”

All things above considered, it looks like MDL is set to confirm an extremely robust project, not least with its tier 1 characteristics.
“Those tier 1 characteristics have a very long mine life–in excess of 25 years and as much as 40 years,” Limb says.

“It will operate towards the bottom of the cost curve because it’s a large dredging operation in free-running sands with no significant vegetation or clay in the sand system and on essentially unpopulated dunes.”

Grande Côte will produce approximately seven per cent of the world’s zircon, which from customer trials will also be the highest quality zircon in the world, largely due to extremely low levels of uranium and thorium. It also has no overburden and it has a shallow water table which supports very large-scale dredging.

“It’ll have a capital cost of US$400 million and as I say we’re in the financing phase and we’re now publically saying that rather than being developed within the public company, the project will be the subject of a spin-out by way of an IPO,” Limb says. “Certainly the equity component of the project will be raised in that spin-out.”

Certainly, doing so will deliver truly world-class results.

MDL and the year ahead

The company has an awful lot going on with Grande Côte, yet that doesn’t mean it has forgotten Sabodala by any means.

“We’ve announced separately that the gold project is being expanded from 2.3 million tonnes to 3.5 million tonnes so we’re in the process of beginning that expansion work and that’s a 12-month job,” Limb says.

“That will lead to production in excess of 200,000 ounces a year moving forward.” MDL brought Sabodala into production quickly, and Limb says that resultantly, there is plenty exploration work left for the company to do.

“We’ve been cranking that up and reinvigorating that recently,” he explains. “That’s starting to bear substantial fruit and we want to really bring on a number of encouraging exploration projects this year, that’s the obvious opportunity.”

Meanwhile at Grande Côte, the aim is crystal clear as the company continues in the financing phase today.

“The obvious thing is to complete the IPO and financing for the mineral sands project and get that into construction,” Limb says. “Construction and financing will be about two years on that project.”

There is no doubt that any news from Sabodala is big news, likely to garner plenty of attention from industry newswires and interested individuals. Perhaps more exciting, is the fact that Grande Côte, with its tier 1 characteristics and position to meet market demand, looks likely to follow suit. MDL is in for a big year, as both projects continue to offer unbridled potential for further success.