Australia-listed South American Ferro Metals (SAFM) has signed a funding agreement with Brazil’s Minas Gerais state for the expansion of its Ponte Verde iron ore project to 8mn t from 1.5mn t.
The state of Minas Gerais has agreed to assist SAFM in securing low cost financing for fixed investment and working capital. The local government will also provide fiscal concessions, tax exemptions and support in the licensing process. Ponto Verde has been declared exempt from sales taxes levied by the state and this could translate into a cost saving of $30mn-35mn over the first three years of the expansion, the firm said. The state will also advise the company and assist it when dealing with other regulatory and environmental bodies in Brazil.
In return, SAFM has agreed to invest $285mn in 2015-17 in the project and to favour local suppliers and service providers during the expansion phase. SAFM has also committed itself to reach a processing capacity of 4mn t/yr of beneficiated concentrate by June 2019 and achieve revenues of $162.4mn in the third year of operation.
SAFM is working on the feasibility study for Ponte Verde’s expansion from 1.5mn t to 8mn t. The study is expected to be completed by the third quarter of this year.
Ponto Verde has measured and indicated reserves of 301.6mn t, with an average Fe content of 40.65pc. Concentrate is produced at 65.5pc Fe. SAFM intends to start exporting iron ore as production expands. Minas Gerais state produces 60pc of Brazil’s iron ore, or more than 170mn t/yr.
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