Hi All.
April 12th 2014. The CEMAC zone can become the next greater production of iron in the world.
Just parts of the Report.
Serge Yanic Nana, president & CEO of Financia Capital, lead advisor of the Cameroonian State for Mbalam iron project, analyses the stakes of the announcement of the purchase agreement, by the trader Noble, iron will produce Sundance.
The Cameroonian local buyers will have a priority purchase of 15% of the output of the mine of Marcellin. Partners and investors in the project also have a priority of 35%, Which induces that, if the local market absorbs its quota and the project partners buy their rated hand, then Noble is committed to reduce its purchases up to 50% of the production. Therefore, a flexible agreement which guarantees that there will be no production not sold during the first 10 years of production of the DSO (Direct Shipping Ore).
The importance of such a contract is huge because the risk of commercialization of the ore, which is one of the main risks of the financing of the project, is fully mixed. This will reassure lenders on the financial ability of Noble to meet its commitments.
This purchase contract, traders have come to announce to the international financial markets that: (1) they have the appetite for iron of Cameroon and The Congo (2) they put financial guarantees in place for future purchases, and (3) they already have (mills) clients that are waiting for this iron Sundance. Cameroon and the Congo should now activate because ads of this type do not come every day. The CEMAC zone to a unique opportunity to become the next greater production of iron in the world.
We can in 15 years export 100 million tons of iron of the CEMAC zone. We must no longer think as a country which develops its resources, but rather a region that develops its potential.
The Noble agreement at the standard international rate is based on the assumptions of a ton of iron to 63 dollars. Then, when in the agreement mentioned sale of iron at standard international rate, mean concretely how much..
Signed by Cam Iron purchase contract deals with a price of iron based on Platts IODEX 62% Fe CFR North China benchmark , which is an international index for trading of iron. This price includes cost of freight for delivery to ports in northern China with a standardization of the cost of the freight to the port of Qingdao in China.
There can be a variation of +/-30% one year to another on freight costs due to demand requirements of vessels.
The Mbalam project remains bankable if ever world iron ore prices plunge to $90 or even $80 / ton which comfort lenders.
African deposits that will emerge in the medium term will be the most attractive in terms of quality of the ore and logistics costs. Mbalam is part of this.
With the announcement by Sundance recently that indicates the company is in advanced negotiation phase with partners for the construction of the railway and the ore terminal. With the announcement of the signing of the purchase agreement with Noble, one can consider that the development of the project advance positively.
On the mobilization of funding component , discussions are ongoing and are very complex. For the first phase, this requires the production of extensive documentation, everything must be carefully structured so that lenders grant loans. Now that the Off-Take agreement is signed, discussions will accelerate, because there is a visibility on the sale of the production.
Regards
Westcott.
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