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Ironhearts’ brave Congo forays

AFR: Published: 08 Feb 2013 19:06:40 | Edited by Luke Forrestal

The enthusiasm surrounding the emergence of the West African iron ore industry has declined from several years ago.

But that doesn't mean juniors such as Equatorial Resources are giving up on their project-building dreams. Equatorial, in fact, was one of the few junior West African iron ore players whose shares held up well last year amid the iron ore price slump and growing investor aversion to small companies with big projects to fund.

Like any good mining boss, Equatorial chief executive John Welborn, a giant of a man who was the first West Australian to play for the Wallabies, believes his company is trading at a substantial discount. But he says the reason Equatorial has not been savaged in quite the same way as some of its peers is probably a combination of good funding, the quality of its assets, and a supportive shareholder base, including big-name investors such as BlackRock, M&G and JPMorgan.

After selling its 20.5?per?cent stake in African Iron into Exxaro's $330?million takeover bid for the company last year, Equatorial has about $60?million in the bank, a blessing for a junior in this kind of market. Welborn says most of his team's energy is being devoted to the Mayoko-Moussondji project in the Republic of Congo, the smaller and less capital intensive of the company's two ROC projects.

Equatorial published a maiden resource of 102?million tonnes of haematite grading 40.2?per?cent iron for Mayoko-Moussondji during the week. One of the beauties of the project is that a rail line runs through the tenements connecting to a deepwater port at Pointe-Noire on the Congo coast. “If you're doing a top-down approach to iron ore in Africa and you’re looking for somewhere tonnes can get onto the market?[with]?existing infrastructure, Mayoko distinguishes itself,” Mr Welborn?says.

The company's other project, Badondo, near Sundance Resources’ Mbalam-Nabeba project in the north of the Congo, is a longer proposition that could justify its own infrastructure solution if exploration efforts go to plan.With what has taken place in the iron ore market in recent months, Welborn believes this will be the year when the wheat is sorted from the chaff in West Africa.

“There [are] 30-40 companies trying to promote different projects and I think some of them are going to have troubles,” he says. “There's going to be a separation of [those] that have value and potential to get into production and those that don't. Our challenge is to make sure ours are in the first group.”