Lodestone resumed the development of its Dordabis high grade iron ore project late in 2018, when it became clear that the seaborne iron ore market had evolved into a high (65% premium index) and low-grade segment (62% index).
Declining worldwide iron ore grades and the push for reduced CO2 emissions, as well as increased steel production efficiencies in mainland China have meant that higher grade ores and concentrates demand a significant premium over their vastly abundant low grades iron ores.
Lodestone’s Initial Feasibility Study
Lodestone conducted a feasibility study for the export of 2 million tons per year of 66% Fe in 2020, with Platts 62% Fe breakeven costs (adjusted for grade premiums) of US$55/dmt (dry metric tonne) landed in China and a capital cost of US$150 million. This is on the back of the current high prices at US$95/dmt landed in China, and the mid-year 2021 peak of above US$230/dmt.
Lodestone remains cautiously optimistic on the long- term price, and with a disciplined cost base, will be able to benefit from market highs, but also remain sustainable during the lows.
The 2020 study gained the interest of one of the worlds iron ore majors, and an offtake agreement was signed early in 2021 in exchange for funding of both a dry processing iron ore fines project and an investment grade feasibility study for a high-grade concentrate demonstration plant.
The investment grade bankable feasibility study will be completed in December 2021. The Dordabis project will initially produce 800,000 tonnes per annum of high grade 66% concentrate which then ramps up to a total output of 2.8 million tonnes per year over a total 15 years life of mine. Financing is currently being structured and will be finalized in the first half of 2022 with senior financing institutions and equity partners that are familiar with the iron ore market.
Lodestone’s First Shipment
Lodestone has demonstrated its operational, logistics and management capabilities in brining one shipment of iron ore fines (59% Fe and high FeO) product to the market on 27August 2021. The complete timeline from concept design to first shipment leaving port was done in a record time of 6 months using only Namibian contractors and operational capabilities.
The opportunity to do this, in an abnormal price environment, has addressed a lot of the concerns on logistics previously expressed by potential funders, given that Namibia is not known as a bulk commodity exporter. Lodestone is not in the lower grade iron ore space and neither does it intend to enter it.
Confidence in a High-Grade Product
The exceptionally clean and high grade concentrate that Lodestone has proven capable of producing, through pilot scale testing, and attracting the attention of one of the world’s largest mining companies to partner through an offtake agreement, gives Lodestone well founded confidence that their high- grade product will be correctly placed, both geographically and commercially in the long term.
There is also a definitive interest and ability to contribute meaningfully to Namibia’s Green Hydrogen initiative through the production of green steel feedstocks, and ultimately the industrialization of Namibia.
Contributed by Lodestone