This is a VERY big deal for the development of BGS!!!! (it's long but please take the time to read to better understand the logistics for BGS)
First there was the concession to upgrade the rail line in 2014 then the revised concession in 2016
Then an article in late June 2017 regarding talks surrounding the potential upgrade to the train line that BGS proposed to use in the SS. The article is below;
Now I can CONFIRM the Train line is being upgraded to the tune of $630 MILLION!!!!!
The train line currently runs, lets make that as clear as possible first. From Abidjan to Ouagadougou.
The upgrade will be to the area that is green on the picture below. That piece of train line from Ouagadougou to Abidjan is 1,260km. That stretch will be upgraded along with an extension 200km to the north to Kaya.
Current suggested path
As per the SS, BGS will transport spodumene via sealed road from the mine site to Ferkessedougou dry port (I will talk more about this later), this trip is 439km. This has never been an issue to me because the roads are sealed and are in very good condition from every report I can find online. Then from Ferkedessedougou train station it would be transported via rail to Abidjan port.
This rail line itself was built in the early 1900's and was in need of an upgrade. When I read about the concession that was signed in 2016, like many things in Africa I didn't hold my breath. Many countries come to the African continent promising the world but when the money needs to be put on the table regarding a project it becomes a completely different story and can often be dragged out for very long periods of time. (This deal itself took 3 years!)
As mentioned in the second image, in 2016 the train line accommodated 900,000t of freight.
With this upgrade the train line will be able to transport 5 million tonnes of freight per year.
A HUGE increase!
So if the train line runs already why is it such a big deal???
When you consider building a lithium mine, whether it be 1mtpa, 2mtpa or even 4mtpa you end up transporting hundreds of thousands of tonnes of concentrate.
A 1mtpa processing plant will produce about 180,000t per year, 360,000t for a 2mtpa and so on.
From all my reading there was never an issue with transporting goods south (Ferk-port). However the train line was approaching full capacity in terms of sending freight north (Port- Ferk).
This became evident on June 2 2017;
So if the issue is heading north on the rail line how does this impact BGS??????
BGS has currently pushed back the PFS to include a potential carbonate plant in the study.
One thing many people don't realise is that a carbonate plant requires a lot of goods to turn the concentrate to carbonate. It's not a small procedure and requires sulphuric acid, coal and several other elements. With concentrate you can have the processor on site and produce concentrate and send it on its merry way. With carbonate it's a completely different story.
What this upgrade allows BGS to do is to put together a longer term vision not only produce concentrate but to have a carbonate plant on site. I have spoken extensively with @Ubique13 and @boy1 about BGS starting off with a 1-2mtpa processing plant to help generate funds while concentrate prices are high, remember we can produce concentrate at $320/t and its currently selling for $850-$900/t and then put the profits realised towards a carbonate plant and bring in the right partner.
With the potential that BGS can earn in the short term regarding concentrate prices it would reduce the % that any potential partner would want as the outlay for them would be reduced. Concentrate prices will not stay high for ever either, hence why CSA global and Como engineers use a LOM price of ~$550/t. However long term forecasts for Carbonate prices are about $14,000/t with BGS likely cost to produce being around $4,000/t.
The profit margin is very large!
So the upgrade to this train line allows any potential partner or T/O of BGS to see that concentrate is a great option in the early years and expansion to carbonate later on is VERY possible. It also gives confidence to any partner/buyer that transport is non-issue.
Ferkessedougou (dry port)
Not only will the line be upgraded with this $630 million but so will the stations which play a pivotal role in the line, that includes Ferkessedougou.
Ferkessedougou is considered a dry port in which companies can store goods in sheltered warehouses and then have them loaded onto trains and sent on their way.
As you can see from the above the storage facilities at the train station are already the LARGEST out of any station on that line. What this allows BGS to do is to mine as much as possible as quickly as possible (even produce carbonate) and then transport it to the storage facilities and have it stored safely.
With the upgrade to the train line and supporting stations I would expect Ferkessedougou to be upgraded even further and storage of concentrate or carbonate materials or carbonate product itself to be a NON-ISSUE.
Upgrading of locomotives
The $630 million will also help upgrade the locomotives in which goods are transported, making the line itself more reliable and faster. Brand new locomotives have already been ordered with some being delivered last year.
"The work will start on September 15, there will also be orders for new material, new locomotives," said Eric Melet, chief executive for development at Bollore Transport and Logistics. "It will go ahead very quickly."
From the above comment it sounds like even more locomotives will be ordered. As mentioned locomotives were ordered last year and Pretoria-based Grindrod Locomotives delivered six of 16 locomotives ordered by Bolloré Logistics for their Sitarail operation, Article below
-Sealed roads from mine site to train station -CHECK
-Existing train line that runs to a port - CHECK
-A $630 million upgrade to that train line - CHECK
-Upgrades coming to the train stations themselves - CHECK
-The largest storage facilities available - CHECK
-Brand new locomotives delivered and ordered - CHECK
-High potential to expand to carbonate plant - CHECK
Add that to;
-High grade deposit at surface - CHECK
-No material contaminants - CHECK
-Good tonnage - CHECK
-High potential to expand tonnage - CHECK
-Good management - CHECK
-Binding off take and Finance - SOON!
This Train line upgrade is GREAT news for BGS and makes the potential of the project even MORE viable. It really is a very crucial factor!
Things are finally starting to fall into place for BGS!
BGS Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held
