Yemen still holds interest!!!Yemen is not out of the picture for Cantex! As many are aware Cantex holds licences for three nickel/PGM deposits in Yemen that potentially have an inground value totaling in the tens of $Billions and that is without the Yemeni gold deposits Al Hariqah, Al Fayad and Jabal Sabrayn. The question in the back of the minds of North American investors is; Are these deposits developable from a political sense? Cantex has suffered a reduced share price due to the belief in North America markets that it is exposed to greater risk with its Yemen holdings. This view is not universal. European investors do not share this opinion as witnessed by a news release from ZincOx today.
ZincOx is a British company developing the Jabali zinc oxide deposit northeast of Sana’a Yemen. They are doing so in joint venture with Anglo-American and an Yemeni company. An interesting side note is that the Canadian major, TeckCominco is a main player in ZincOx, having a representative on the ZincOx board. The news release shows that plans or being forwarded for development of the Jabali deposit. Indeed, Yemen is not out of bounds for mineral development by western interests in conjunction with Arab backers. I predict that Cantex will not be different – but it has a potential of a far greater scale!
Regardless, here is today’s news release from ZincOx – check it out.
P10
15 March 2005 Jabali Feasibility Study Completed ZincOx Resources plc
("ZincOx" or "the Company" - symbol ZOX) is pleased to announce the
completion of the feasibility study for the development of the Jabali zinc
oxide deposit, in Yemen. The study indicates a project, with an internal
rate of return (IRR) of 27% and a net present value of £31.2 million (post
tax, using a discount rate of 10% and a zinc price of $1,000 / tonne)
Commenting on the results, Andrew Woollett, Managing Director of ZincOx,
said "This study confirms the considerable value we have created at Jabali
and it should allow the project finance for its development to be put in
place before the year end so that construction can commence early next year"
The deposit, which is located 110 km northeast of Sana'a, the capital city
of Yemen, contains a geological resource of 12.6 million tonnes of oxide ore
with grades of 8.9% zinc, 1.2% lead and 68g/t silver. There is the potential
for increasing the resource further as the deposit is open on two sides. The
mineral rights to the deposit are held through an Exploration Licence which
is owned by a joint venture comprising ZincOx, Anglo American plc and Ansan
Wikfs (Hadramaut) Ltd, a Yemeni company. Under the terms of the joint
venture agreement, ZincOx is entitled to a 60% interest by completing the
feasibility study and Anglo and Ansan are entitled to 20% each. ZincOx is
currently working towards the finalisation of the terms of an Exploitation
Agreement with the Government of Yemen, which will confirm the tax and other
fiscal conditions assumed in the feasibility study. MDM Ferroman, a mineral
engineering firm from South Africa, carried out the feasibility study, with
input from other consultants. The process flowsheet was designed by ZincOx
and tested in a pilot plant operated by CTP, an independent Belgian
metallurgical laboratory. The study is based on the mining and processing of
800,000 tonnes per year of ore, containing 9.2% zinc, over 11.2 years.
Mining will be from an open pit, with a 2:1 ratio of waste to ore. The ore
will be treated by means of a proprietary hydrometallurgical process, test
work on which has indicated a 77% zinc recovery. The plant is designed to
produce approximately 70,000 tonnes per year of a high quality (99.9%) zinc
oxide, containing 80% zinc. Marketing studies and test work carried out by
ZincOx indicate that the final product will be of a quality suitable for
direct marketing to zinc oxide consumers in Europe, the Far East and
America. This material will command a substantially higher price for the
contained zinc than that offered by zinc smelters, which typically only pay
about 55%-65% of the value of the metal contained. Capital costs of the
project are estimated at US$68.7 million, with a further US$4.0 million for
waste rock removal prior to mining of ore and US$2.7 million required for
working capital.
A small amount of lead is recovered and sold but generally the lead is not
of an economic grade. The silver, however, passes to the tailings and a
separate study has commenced to assess the viability of its commercial
recovery. Scott Wilson Mining carried out an Environmental Impact Assessment
as part of the feasibility study, in accordance with World Bank guidelines
and input from the Yemen Environmental Protection Authority. The study
states that overall the project is considered to provide a net beneficial
impact. The effect of the project with respect to employment and
infrastructure development will have a long term positive impact beyond the
life of the project and the area of the mine. The Government of Yemen has
stated its intention to diversify the economy of the country away from its
dependence on oil and gas and is actively encouraging investment in the
mining industry. The revenue generated from Jabali in terms of taxes and
industrial development in Yemen will bring significant long term benefits to
the country. Discussions have commenced with certain financial institutions
with respect to the provision of debt finance for development of the
project. Assuming the Exploitation Agreement is finalised by the end of the
second quarter, then financing should be completed by the end of this year.
Construction will then commence in 2006 with production scheduled for the
second half of 2007.