Cabral looks to broaden Brazil iron ore footprintMichael Quinn,...

Cabral looks to broaden Brazil iron ore footprint
Michael Quinn, 17 March 2011

{pic}Cabral's Chris Robinson (left) and CEO Michael Bogue at the Cabral magnetite project in Brazil.
THE well-credentialed and potentially infrastructure-rich iron ore minnow Cabral Resources is aiming to pick up hematite ground in the emerging iron ore region of the Brazilian state of Bahia as aeromag surveys and drilling get set to begin on Cabral?s existing magnetite tenure.
Cabral?s CEO Michael Bogue, who was this week in Brazil to continue driving the company?s establishment of an iron ore business, told HighGrade the company had already identified hematite prospective ground and would be undertaking further assessment and negotiations. A regional aeromag survey anticipated in April/May would also be assessed in the hematite hunt.
Be that as it may, the main game for Cabral is its namesake magnetite project ? acquired for what looks an apparently bargain price of $US12.7 million (made up of cash and scrip).
Bogue and newly appointed Cabral executive director Chris Robinson believe the project has a potential resource of 331 million to 644 million tonnes of high-grade, medium-to-coarse grained magnetite ore amenable to beneficiation by a simple crushing, grinding and magnetic separation process.
According to Bogue, that resource assessment is ?conservative?. While sceptics might query just how conservative an estimate based on little more than walking the banded iron formations and limited met work can be, the highly experienced Robinson (with 37 years of involvement in the Australian and international iron ore industry), has pedigree. Bogue pointed out that Robinson?s similarly undertaken assessment of Gindalbie?s Karara deposit some years back when the junior was but a small gold miner, was subsequently proven accurate ? albeit Gindalbie is now taking the pit deeper.
Still, Bogue appreciates the market wants to see the drilling prove the case for Cabral, and that work is planned to begin following the aeromag surveys.

{pic}Cabral's Bogue ... government-funded railway a potential boon.
Broady speaking, he is hopeful delivery of anticipated exploration results over the course of 2011 will see Cabral venture gain some market traction, and, by way of example, result in the gap in enterprise values narrowed between Cabral and obvious peer, Brazilian Metals Group.
Meanwhile, Cabral?s big selling point versus its peers (including in Australia and Africa) is infrastructure. The federal and state government are bankrolling a new rail line that goes right through Cabral?s tenements and port ? the latter some 400km away. The line has been initially earmarked to provide annual iron ore capacity of 45Mt, and with planned operation developments in the broader area by London-based Eurasian Natural Resources Corp accounting for 19.5Mt, ?there?s plenty of headroom? for the likes of Cabral, according to Bogue.
Bogue, who was formerly an investment banker with JP Morgan, doesn?t buy the thesis that a new wave of iron ore projects coming on stream later this decade just as Cabral is getting into production stride, could spell strife. For starters he believes many of the anticipated projects in Africa will take far longer to emerge given the significant capital hurdles with infrastructure, while expectations of the carte blanche financing of those projects by Chinese parties are misplaced.
And secondly, he believes any iron ore price decline will merely see lower quality iron ore production displaced by the better quality offering such as Cabral is planning.
Bogue?s network on questions such as these include continuing strong connections in China, with Bogue/Cabral (which was previously known as RIMCapital), being involved in 2009 in a joint venture with China Railway Materials Commercial Corp to invest in would-be Pilbara iron ore producer United Minerals Corp. Such was BHP Billiton?s concern at the potential of a Chinese firm getting a toehold in the region, that it stymied the deal by taking over UMC outright. (RIMCapital and its Chinese partner were also under-bidders on the Oakajee rail and port process).
Bogue conceded the question of potentially burgeoning supply was one posed often by investors during the process of recently raising $A25 million in equity, with the quantum of the raising suggesting Bogues? counter claims resonated.
Investors in the raising included Passport Capital ? an American institution that was one of the backers of Mozambique coal miner Riversdale ? and UBS.
The placement was made at 20c with the stock trading this week at 16c ? giving it a market capitalisation of just over $A41 million.