Tete Iron Ore Project Scoping Study PDF

Scoping Study
November 2011
Baobab Mining Services Pty Ltd
Tete Iron Ore Project
WPER672AJ
28 November 2011

49 Philmore Street
Fremantle
WA 6160
Attention: Ben James
Dear Ben,
RE: Scoping Study Tete Iron Ore Project

It is with pleasure that Coffey Mining provides you with this final draft report, describing the findings and
recommendations derived from the 2011 update of the Conceptual Desktop Study that was first
undertaken in 2009.
Please review and revert with any comments.
For and on behalf of Coffey Mining Pty Ltd
Harry Warries
Manager Mining West Perth
WPER672AJ
Coffey Mining Pty Ltd ABN 52 065 481 209

1162 Hay Street, West Perth WA 6005 Australia
PO Box 1671, West Perth WA 6872 Australia
T (+61) (8) 9324 8800 F (+61) (8) 9324 8877 coffey.com
Coffey Mining Pty Ltd
DOCUMENT INFORMATION
Author(s):
Harry Warries
(FAusIMM)
Chris Witt
Senior Consultant Metallurgy
(MAusIMM)
Iain Macfarlane
Associate Resource Consultant
(MAusIMM,MAIG)
Date:
28 November 2011
Project Number:
WPER672AJ
Version / Status:
Final
Copies:
(1)
Coffey Mining Perth
(1)
Document Review and Sign Off
Primary Author:
Harry Warries
This document has been prepared for the exclusive use of Baobab Mining Services Pty Ltd (Client) on the basis of instructions,
information and data supplied by them. No warranty or guarantee, whether express or implied, is made by Coffey Mining with
respect to the completeness or accuracy of any aspect of this document and no party, other than the Client, is authorised to or
should place any reliance whatsoever on the whole or any part or parts of the document. Coffey Mining does not undertake or
accept any responsibility or liability in any way whatsoever to any person or entity in respect of the whole or any part or parts of
this document, or any errors in or omissions from it, whether arising from negligence or any other basis in law whatsoever.
Tete Iron Ore Project WPER672AJ

Scoping Study November 2011
Table of Contents
EXECUTIVE SUMMARY...........................................................................................................................i
1
Introduction ................................................................................................................................. 3
1.1
Scope of Work .................................................................................................................. 3
1.2
Principal Sources of Information ...................................................................................... 3
Project Location .......................................................................................................................... 5
Geology and Resources ............................................................................................................. 6

3.1
Regional Geology ............................................................................................................. 6
3.2
Project Geology ................................................................................................................ 7
3.3
3.2.1
General Lithology .................................................................................................... 7
3.2.2
Structure .................................................................................................................. 7
3.2.2.1
Chitongue Grande ................................................................................................... 7
3.2.2.2
South Zone .............................................................................................................. 7
3.2.2.3
Ruoni ....................................................................................................................... 7
3.2.3
Mineralisation .......................................................................................................... 8
3.2.4
Weathering and Oxidation ....................................................................................... 9
Resource Estimate ........................................................................................................... 9

3.3.1
Drilling ..................................................................................................................... 9
3.3.2
Resources ............................................................................................................. 10
Metallurgy and Processing ...................................................................................................... 11

4.1
Introduction ..................................................................................................................... 11
4.2
Metallurgical Testwork Programme ................................................................................ 11

4.2.1
4.3
Bond and Abrasion Index Results ......................................................................... 12
Metallurgical Testwork Summary ................................................................................... 12

4.3.1
Minerology ............................................................................................................. 13
4.3.2
Comminution ......................................................................................................... 13
4.3.3
Magnetic Separation ............................................................................................. 13
4.3.4
Gravity Separation ................................................................................................. 14
Flowsheet Development ........................................................................................................... 15

5.1
Titano-Magnetite Concentrate ........................................................................................ 15
5.2
Smelting & Refining ........................................................................................................ 18
5.3
Design Criteria ................................................................................................................ 20
Market Analysis ......................................................................................................................... 22

6.1
6.2
Pig Iron ........................................................................................................................... 22

6.1.1
Introduction ............................................................................................................ 22
6.1.2
Market Size: .......................................................................................................... 22
6.1.3
Pig Iron Price Development ................................................................................... 23
Iron Concentrate ............................................................................................................. 24

6.3
7
Titanium .......................................................................................................................... 25
Project Development................................................................................................................. 27
7.1
Introduction ..................................................................................................................... 27
7.2
Mining ............................................................................................................................. 27
7.3
Processing ...................................................................................................................... 27
7.4
Infrastructure .................................................................................................................. 28
7.4.1
Roads .................................................................................................................... 28
7.4.2
Port ........................................................................................................................ 28
7.4.3
Rail ........................................................................................................................ 29
7.4.4
Airport .................................................................................................................... 29
7.4.5
Workshop and Support Facilities ........................................................................... 29
7.4.6
Water Supply ......................................................................................................... 30
7.4.7
Electricity Supply ................................................................................................... 30
7.4.8
Coal Supply ........................................................................................................... 31
Operating and Capital Cost Estimates .................................................................................... 33

8.1
Introduction ..................................................................................................................... 33
8.2
Operating Costs.............................................................................................................. 33
8.3
Capital Costs .................................................................................................................. 34
Project Economics .................................................................................................................... 37

9.1
Introduction ..................................................................................................................... 37
9.2
Cash Flow Inputs ............................................................................................................ 37
9.3
9.2.1
Commodity Prices ................................................................................................. 37
9.2.2
Operating and Capital Costs ................................................................................. 37
9.2.3
Other Cash Flow Inputs ......................................................................................... 38
Cash Flow Model Results ............................................................................................... 38

9.3.1
Scenario A: Based on 3Mtpa Concentrate Production .......................................... 38
9.3.2
Scenario B: Based on 1Mtpa Pig Iron Production ................................................. 41
10
Discussion ................................................................................................................................. 45
11
Recommendations .................................................................................................................... 46
11.1
Resources ...................................................................................................................... 46
11.2
Metallurgy and Processing ............................................................................................. 47
11.3
Infrastructure .................................................................................................................. 48
11.4
Mining ............................................................................................................................. 48
11.5
Operating and Capital Cost Estimates ........................................................................... 48

List of Tables
Table 3.3.2_1 Resource Statement
10
Table 4.2.3_1 Bond and Abrasion Index Results
12
Table 5.1_1 Typical Ores used at Panzhihua and Chegde
15
Table 7.4.2_1 Port Development Timelines
29
Table 8.2_1 Summary Site Operating Costs
33
Table 8.2_2 Summary Processing Operating Cost Estimate
34
Table 8.3_1 Summary Capital Costs
35
Table 8.3_2 Concentrator Capital Cost Estimates
35
Table 9.2.1_1 Commodity Price Assumptions
37
Table 9.3.1_1 Scenario A - Base Case Cash Flow Model Summary
39
Table 9.3.1_2 Scenario A - Sensitivity Analysis Input Parameters
39
Table 9.3.1_3 Scenario A - Summary Sensitivity Analysis Results
40
Table 9.3.2_1 Scenario B - Base Case Cash Flow Model Summary
42
Table 9.3.2_2 Scenario B - Sensitivity Analysis Input Parameters
43
Table 9.3.2_3 Scenario B - Summary Sensitivity Analysis Results
43
List of Figures
Figure 2_1 Project Location
Figure 3.1_1 Regional Geology
Figure 3.2.2.3_1 Tenge / Ruoni Prospects
Table 5.1_2 Tete Project High Level Mass Balance
16
Figure 5.1_1 Tete Project Conceptual Flowsheet
17
Figure 5.2_1 Tete Project Conceptual Flowsheet for Pig Iron and Ti Pigment Production
19
Figure 5.2_2 Typical Pig iron Smelting Process
20
Figure 5.2_1 Tete Project Conceptual Design Criteria
21
Figure 6.1.1_1 Pig Iron, Scrap Metal and Thermal Coal Prices 2009 to 2011
22
Figure 6.1.3_1 Pig Iron Demand 2000 to 2011
23
Figure 6.1.3_2 Pig Iron Price 2001 to 2011
24
Figure 6.2_ Crude Steel production 2008 to 2010
24

Figure 7.4.7_1 Overview of Mozambique Power Distribution Grid
31
Figure 7.4.8_1 Coking Coal Price 1996 to 2011
32
Figure 7.4.8_2 Thermal Coal Price 1996 to 2011
32
Figure 9.3.1_1 Scenario A - Summary Sensitivity Analysis
41
Figure 9.3.2_1 Scenario B - Summary Sensitivity Analysis
44

EXECUTIVE SUMMARY
Coffey Mining Pty Ltd (Coffey Mining) was retained by Baobab Mining Services Pty Ltd (Baobab)
to undertake a scoping study of the Tete Iron Ore Project (the Project) in Mozambique.
The current resource base, comprising three areas, is 267Mt as summarised below.
(1)
Tonnage DTR
(%)
(Mt)
Prospect
Chitongue Grande
South Zone
Ruoni North
Total
Note 1: Indicative only
Fe
(%)
V2O5
(%)
TiO2
(%)
60.9
113.0
93.4
20.5
25.0
47.3
24.9
27.5
34.6
0.18 9.59
0.11 10.14
0.39 12.66
267.3
22.8
29.4
0.3
10.9
The mineralisation at Tete includes significant amounts of vanadium and titanium, the latter
associated with ilmenite.
Ruoni North exhibits a much higher mass recovery and Fe head grade than both Chitongue
Grande and South Zone and, as such, economic analysis of the Project was based on Ruoni North
only, which currently has a sufficiently large resource base to sustain a mine life of in excess of 15
years. Furthermore, preliminary drilling results indicate that the Tenge deposit, which is adjacent
to Ruoni North, will exhibit a similar grade tenor and possibly will yield a larger tonnage.
Economic analysis indicates that there is the potential to establish an economically viable
operation at the Tete Iron ore Project. This was based on the assumption that two concentrates
can be produced, namely a titanium magnetite and an ilmenite concentrate. In addition, the
scenario of producing pig iron was evaluated using conventional iron making technology (Rotary
Kiln, Smelter), which is well established in South Africa. The estimated net present value (NPV)
and internal rate of return (IRR) for the two product scenarios evaluated are shown below.
Item
Resource base
Product produced
Gross Revenue
Royalty
Net Revenue
Operating costs
Capital Cost
Initial
Sustaining
Cashflow
NPV @ 10% - Before tax
- After tax
IRR
- Before tax
- After tax
Payback (Based on discounted cashflow)
Mine life
Notes:
1.
2.
Unit
Mt
Mtpa
US$M
US$M
US$M
US$M
US$M
US$M
US$M(1)
US$/Yr(2)
US$M
%
Yr
Yr
Iron Concentrate
94
3.0
5,133
154
4,979
2,735
448
101
1,695
143
467
247
28
21
3.9
15
Pig Iron
94
1.0
12,101
363
11,738
4,571
690
297
6,180
275
1,361
892
34
27
3.1
25
Based on life of mine, including total capital expenditure

Based on production years only

Page: i
The infrastructure development within the Tete Province, as well as the general infrastructure
development within Mozambique will be key to the Project and companies such as Vale and Rio
Tinto, who are developing substantial coking and thermal coal deposits immediately south of
Baobabs tenure, are supporting several expansion projects of existing port and rail facilities as
well as exploring Greenfield options.
The coal operations represent a cheap source of energy for the Project. In addition, low tariff
hydro-electric power is readily available within close proximity to the Project.
Technical information for Ruoni North is limited to resource related data and, as such, the
economic analysis included in this report is based on metallurgical testwork from Chitongue
Grande and South Zone, as well as general knowledge of the Southern African Region and
Mozambique in particular.
On the basis of the Scoping Study Coffey Mining recommends that the project should progress to
a Pre Feasibility Study stage to establish the most viable process route.

Page: ii
INTRODUCTION
1.1
Scope of Work
Coffey Mining Pty Ltd (Coffey) was retained by Baobab Mining Services Pty Ltd (Baobab) to
update the 2009, high level conceptual desktop study (the Study) of the Tete Iron Ore
Project (the Project) in Mozambique.
Baobab holds licences that cover an area of approximately 632km2. These licences contain
clusters of known vanadiferous titanomagnetite deposits, at Singore, located approximately
30km due north of Tete; and prospects known collectively as the Massamba Group, located
55km north-northeast of Tete.
This report pertains to three distinct areas that belong to the Massamba Group only and they
are:
Chitongue Grande
South Zone
Tenge/Ruoni
Tenge/Ruoni is further broken down into Ruoni North, Tenge and Ruoni South prospects.
The update was undertaken on the back of new resources that were delineated within the said
Massamba Group of deposits as a result of the exploration drilling programmes carried out
between 2009 and 2011. These drilling programmes provided a total of 17,257m of diamond
drilling (DD) and 40,479m of reverse circulation (R/C) drilling to date (these drilling
programmes include the two prospects Tenge and Ruoni South, which so far do not have
resources associated with them).
The principal areas that are discussed in this report are:-
1.2
Geology and resources
Metallurgy and Processing
Mining
Infrastructure
Estimates of operating and capital costs
Financial Analysis
Principal Sources of Information

The key information supplied by Baobab is listed below:-

Page: 3
Analytical data including analytical and density measurements used for resource
estimation;
Drill core photography;
Testwork Study carried out by Coffey Mining in 2011
Petrography report by Roger Townend and Associated Consulting Mineralogists; 2010
Ammtec QemScan Analysis (Project A11474) August 2008 interpreted by Mets
Baobab Resources PLC, Scoping Study Testwork Report by Mineral Engineering

Technical Services Pty Ltd, February 2009;
Miscellaneous email correspondence discussing general infrastructure items; and
Company compiled PowerPoint presentation.

Page: 4
PROJECT LOCATION
The Project is located immediately north of the Provincial capital of Tete as shown in Figure
2_1.
Figure 2_1
Project Location
Tete Iron Ore Project Mozambique
Source: Baobab

Page: 5
GEOLOGY AND RESOURCES
3.1
Regional Geology
The following geological account has been prcised from GTK Consortium (2006).
The Tete (Gabbro-Anorthosite) Suite forms an elongate, sub-horizontal sheet-like body with a
surface area of close to 6,000km. It stretches from near Estima in the west across the
Zambezi River, north of Tete, to almost the border with Malawi in the east, a distance of over
150km (Figure 3.1_1). Its maximum north south dimension is approximately 60km. Its
contact with the rest of the crystalline basement is tectonic. Elsewhere, deposits of the Karoo
Supergroup cover the suite unconformably.
The Tete Suite forms a dissected plateau, with altitudes between 200m and 400m, with local
elevations ranging from 700m to 1,000m.
The plateau surface is covered by widespread and locally thick eluvial deposits consisting of
blocks and boulders of the more resistant rock types of the suite.
Figure 3.1_1
Regional Geology

Page: 6
The Tete Suite is composed predominantly of gabbro, leucogabbro and norite, with
subordinate anorthosite and minor but widespread ultramafic rock types, mostly pyroxenite,
and rocks mainly composed of iron-titanium oxides. Rock fabrics are generally massive and
medium- to very coarse-grained or even pegmatitic. Widespread replacement of the original
minerals and the imposition of planar fabrics occur in various places throughout the suite but
are most common along the contact with the crystalline basement. These contact zones are
characterised by ubiquitous and intense brittle and ductile shearing.
The Tete Suite is cut by numerous basic dykes up to 10m wide and form swarms parallel or,
in many cases, oblique or at right angles to the magmatic banding. In the latter cases, their
margins are intensely sheared and the dykes are in places disrupted. Where intensely
foliated and recrystallised, dyke rock becomes difficult to distinguish from gabbroic country
rock. At some localities, 20% of the volume of the rocks is composed of dykes. Four
separate intersecting sets of dykes have been recognised, of which the youngest may be of
Karoo age.
3.2
Project Geology
3.2.1
General Lithology
The host rocks and mineralisation are a part of the Tete Suite, and consist of a stacked series
of gabbros, anorthosites and massive and breccia style layered magnetite units. The host
rocks were subjected to a later igneous phase(s) which resulted in the intrusion of numerous
northeast-southwest oriented dolerite dykes.
3.2.2
Structure
3.2.2.1 Chitongue Grande

The cumulate package at Chitongue Grande dips at a shallow angle towards the southeast.
The occasional low- to medium-angled thrust fault was recorded during core logging. Their
attitude or effect on the geological continuity is unknown due to insufficient drilling information.
They may be responsible, however, for grade variation between the southeast and the
northwest portion (in general, there is a sharp drop-off in grade to the northwest).
3.2.2.2 South Zone

At South Zone, the general strike of the deposit is north-south. The package appears to be
vertically to sub-vertically dipping for the main part.
3.2.2.3 Ruoni
Ruoni is the easternmost prospect area of the Massamba Group. Drilling at Ruoni has
intersected a heavily mineralised package varying from 60m to 150m in thickness.
Mineralisation has been synformally folded with the fold hinge plunging gently to the westnorthwest. Exploration campaigns in the prospect area have been divided into three resource
blocks, namely Ruoni North, Tenge and Ruoni South as shown in Figure 3.2.2.3_1.. At this

Page: 7
stage, Ruoni North is the only one for which sufficient drilling was completed to allow a
resource to be estimated.
Figure 3.2.2.3_1
Tenge / Ruoni Prospects
Ruoni North
Tenge
Ruoni South
Ruoni North
Tenge
Ruoni South
Ruoni North constitutes approximately 1km of strike along the northern limb of the fold.
Drilling has intersected a substantial package of mineralisation from surface dipping at 25 to
50 to the southwest.
The mineralisation tends to be more steeply dipping at surface where it outcrops, becoming
less steep with depth.
3.2.3
Mineralisation
In general terms, oxide mineral cumulates form in layered intrusions when fractional
crystallisation has progressed enough to allow the crystallisation of oxide minerals which are
invariably a form of spinel. This can happen due to fractional enrichment of the melt in iron or
titanium.
These conditions are created by the high-temperature fractionation of highly magnesian
olivine and/or pyroxene, which causes a relative iron-enrichment in the residual melt. When
the iron content of the melt is sufficiently high, magnetite or ilmenite crystallise and, due to
their high density, form cumulate rocks.
These oxide layers form laterally continuous deposits of rocks containing in excess of 50%
oxide minerals.
The following describes the main mineralisation types at Chitongue Grande as reported by
Townend (2009):
The massive oxide drill core is dominantly composed of coarse (+2mm) magnetites and
ilmenites. Magnetite contains very exsolved fine zincian hercynite and ilmenite. Its
composition is weakly titaniferous and vanadiferous. The ilmenite contains exsolution
haematite. The minor gangue content is hercynite spinel and an orthoamphibole.

Page: 8
The breccia sample is an oxide rich probably hydrothermally altered former gabbro with a
strong corona development of late silicates and corundum. The major magnetite and ilmenite
both occurs as coarse-grained material. The magnetite also contains quite coarse exsolution
lamellae of ilmenite and the ilmenite fine exsolution of haematite. The magnetite composition
is weakly titaniferous and vanadiferous.
Magnetite is also present as regular inclusions in corundum areas and as fines in the silicate
cleavages particularly plagioclases.
3.2.4
Weathering and Oxidation

At Chitongue Grande, a well-defined oxidation profile is developed over most of the area,
although dyke material can locally outcrop (not captured by the drilling, but observed in the
field
In general, the oxide zone is between 15m and 30m thick. A transitional zone between 20m
and 30m thick separates oxide from fresh material.
The mineralisation itself within the oxide zone appears to be little affected by the oxidation
process, magnetite continuing to be the dominant mineral there.
At South Zone, apart from the diamond drillholes, oxidation effects were not recorded and, as
such oxidation surfaces were not modelled.
Similarly, no oxidation surfaces could be modelled at Ruoni North. However, the morphology
of the near-surface mineralisation (steeply dipping and also outcropping) means that oxidation
will have a minimal effect on the mineralisation here.
3.3
3.3.1
Resource Estimate
Drilling
Chitongue Grande
There is drilling coverage on a nominal 100m by 100m grid over the target area, with drilling
being aligned along sections orientated northwest southeast.
The host rocks were intersected by 15 DD and 43 RC drillholes. Not all assays for these
drillholes were available for resource estimation.
South Zone
At the time of compilation of the resource estimate, there was drilling coverage on a nominal
100m by 50m grid over the target area, with drilling being aligned along sections orientated
either east-west or northwest southeast. The host rocks were intersected by 126 RC
(including redrills) and nine DD drillholes. Not all assays were available at the time of
resource estimation.

Page: 9
Ruoni North
There is drilling coverage on a 100m by 100m or 100m by 200m grid over the target area,
drilling being aligned along sections orientated northwest southeast. The host rocks were
intersected by 5 DD and 32 RC drillholes. Not all assays were available at the time of
resource estimation.
Ruoni South
At the time of writing this report, 21 (4,150m) DD and 6 (1,059m) RC holes had been drilled at
Ruoni South.
Tenge
At the time of writing, 14 (2,514m) DD and 8 (1,494m) RC holes had been drilled at Tenge.
3.3.2
Resources
Within the Tete Iron Ore Project, Coffey Mining has estimated the Mineral Resources for the
drilled portion of:
The Chitongue Grande prospect as at 26 October 2011.
The South Zone prospect as at 29 August 2011.
The Ruoni North prospect as at 27 October 2011.
All grade estimation was completed using Ordinary Kriging (OK). OK was considered
appropriate based on review of a number of factors including the quantity and spacing of
available data, the interpreted controls on mineralisation and the style of mineralisation.
The resources that were estimated for the three deposits are shown in Table 3.3.2_1.
Table 3.3.2_1
Titano-Magnetite Mineral Resources
Grade tonnage as at October 2011
Reported within Material Type Horizons for Chitongue Grande Only
Whole Rock Grade Estimates Derived by Ordinary Kriging
No Lower Grade Cutoff Applied
Tonnage Fe V2O5 TiO2 SiO2 Al2O3 P
(Mt)
(%) (%) (%) (%) (%) (%)
LOI CaO K2O MgO Mn Na2O S

(%) (%) (%) (%) (%) (%) (%)
Prospect
Material
Type
51.3
24.9 0.18 9.59 29.32 12.00 0.03 -0.36 4.88 0.69 4.71 0.19 2.15 0.31
Chitongue
Grande
Transition
5.4
24.5 0.18 9.45 30.29 12.32 0.02 -1.62 4.61 0.61 4.29 0.19 2.17 0.18
Oxidised
4.2
25.3 0.18 9.74 29.04 12.17 0.02 -1.09 4.31 0.54 3.91 0.19 2.00 0.10
113.0
27.5 0.11 10.14 25.85 8.00 0.29 -0.67 5.22 0.34 6.87 0.31 1.19 0.31
Fresh
South Zone
All
Ruoni North
All
Total

93.4
34.6 0.39 12.66 12.76 10.17 0.003 -1.58 2.63 0.23 4.97 0.21 1.18 0.20
267.3
29.4
0.3
10.9 22.1
9.7 0.124 -0.9
4.2
0.4
5.7
0.2
1.4
0.3
Page: 10
METALLURGY AND PROCESSING
4.1
Introduction
The Project is largely comprised of a number of vanadiferous titano-magnetite deposits. The
metallurgical testwork carried out to date has identified the potential for processing of
separate titano-magnetite and ilmenite concentrates, which could be further refined onsite or
sold as concentrate to third party refiners.
The primary product is a high grade titano-magnetite concentrate, which also has a relatively
high vanadium content. A second ferro-titanium ilmenite concentrate may also be viable with
further processing to produce a saleable titanium product.
This study has evaluated two scenarios, namely:
Producing 3Mtpa of titano-magnetite concentrate

This scenario assumes a crusher feed rate of approximately 6.4Mtpa to produce
approximately 3.0Mtpa of titano-magnetite concentrate consisting of approximately 58%
Fe and ~0.7% V2O5. Additionally, approximately 0.5Mtpa of 50% TiO2 ilmenite
concentrate will also be produced and sold separately. Both products will be railed to
suitable ports for export.
Producing 1Mtpa of pig iron

This scenario assumes a crusher feed rate of approximately 3.6Mtpa to produce
approximately 1.7Mtpa of titano-magnetite concentrate, which will be refined on site in a
dedicated direct reduction and smelting facility to produce 1.0Mtpa of pig iron product.
Additionally, approximately 0.3Mtpa of 50% TiO2 ilmenite concentrate will also be
produced and sold separately. The vanadium will also be recovered as vanadium
pentoxide slag from the smelting/oxidisation process.
The metallurgical testwork carried out to date has been used to establish the base design
criteria for processing and beneficiation of the Tete ore types and the production of the high
grade iron concentrate. Preliminary results also indicate that an illmenite concentrate may
also be produced as part of the process, however further testwork and optimisation is yet to
be completed.
4.2
Metallurgical Testwork Programme

A number of metallurgical testwork programmes have been carried out on the Tete deposit to
date. A preliminary metallurgical investigation was carried out as part of a conceptual study
by METS in February 2009. This study focused on a number of samples from the Caangua
and Chitongue zones.
A more detailed metallurgical investigation was performed by Coffey and completed in July
2011. The metallurgical testwork was aimed at providing information from three different

Page: 11
areas of the deposit. The targeted areas were for the metallurgical programme included
Chimbala Scout, Chitongue Grande and South Zone.
Further exploration has since identified additional resources, namely the Ruoni and Tenge
deposits. No detailed metallurgical testwork has been carried out on these ore sources to
date, although DTR analysis on assay samples indicate that a similar concentrate grade of
58% can be produced but at a higher yield of 47%. Further comprehensive metallurgical
testwork for these ore sources is expected to be carried out in a subsequent study.
4.2.1
Bond and Abrasion Index Results

Physical testwork including the Bond rod and ball mill indices (Wi rod, Wi ball) and Abrasion
Index (Ai) were conducted on 4 composite samples (composite 2,7,10 and 15). Physical
characterisation was not performed on composite 6 due to lack of mass.
Table 4.2.3_1 identifies the physical testwork results obtained at a grind size of 106m.
Table 4.2.3_1
Bond and Abrasion Results
Composite ID
2
7
10
15
Avg
Ai
Wi rod
kWh/t
Wi ball
kWh/t
Rod:Ball
Ratio
0.2877
0.1768
0.2894
0.3076
0.2654
15.1
16.8
17.7
16.4
16.5
15.3
17.1
14.7
17.4
16.12
0.99
0.98
1.20
0.94
1.02
The average rod and ball Bond work indices for the composite samples were 16.5kWh/t and
16kWh/t respectively, which would be categorised in the medium hard range for milling
competency. The samples display amenability to SAG milling with a rod:ball bond index ratio
of 1.0. It is generally considered that if the rod:ball ratio is less than 1.25 then the material is
likely to be amenable to SAG milling, although this would still need to be confirmed via more
detailed JK Tech type testwork.
The abrasion index of the samples places them in the medium category in terms of
abrasiveness and the specific gravity measurement of 4.0t/m is typical for this type of sample.
4.3
Metallurgical Testwork Summary

Preliminary metallurgical testwork has to date focused on the Chitongue and South Zone
areas in the Tete group. The results indicated that a primary titano-magnetite and ferrotitanium ilmenite concentrates could be recovered by magnetic and gravity methods
respectively.
Although a detailed metallurgical investigation into the Tenge/Ruoni deposits has yet to be
completed, the preliminary assay and DTR results indicate that the material is significantly

Page: 12
higher in Fe head grade and that comparable titano-magnetite and ferro-titanium concentrates
can be produced using the same flowsheet derived from previous work.
Key findings from the 2010 metallurgical testwork on Chitongue/South Zone ore zones used
to establish the basic concept and flowsheet development are summarised below:-
4.3.1
Minerology
Mineralogy examination was undertaken in Perth, Australia by Roger Townend and
Associates. The oxide composition of the selected composite samples consists of titanomagnetite, titano-hematite, ilmenite and rarely goethite. The titano-magnetite can vary from
unoxidised to very oxidised samples in the form of martite textured titano-hematite.
The ilmenite is in contrast very fresh for all the composite samples and occurs partly as an
exsolution product in the magnetite. The ilmenite lamellae follow the octahedral host
structure. The relationship between the magnetite and this ilmenite can be complex.
4.3.2
Comminution
The average rod and ball Bond work indices for the composite samples were 16.5kWh/t and
16kWh/t respectively, which would be categorised in the medium hard range for milling
competency. The abrasion index of the samples places them in the medium category in
terms of abrasiveness and the specific gravity measurement of 4.0t/m is typical for this type
of sample.
4.3.3
Magnetic Separation
Davis Tube Recovery at 500 Gauss with a grind size of 100% passing 53m was conducted.
The results indicate that a concentrate with an average grade of 62% Fe mag with a
Vanadium content at 0.36%, a SiO2 content at 1.37% and TiO2 averaging 7% can be
produced. However significant variations from the average grade were identified.
Magnetic susceptibility tests were carried out at a number of strengths to determine primary
iron grades and recovery. The first round of tests was conducted at 500, 3000 and 5000
Gauss at a grind size of 53m.
Results show that 500 and 3000 Gauss gave similar performance in terms of grade achieved
with a higher metal recovery at 3000 Gauss. The average results for Fe grade and recovery
were 60% and 57% respectively. The TiO2 content was approximately 8%, The 5000 Gauss
test resulted in higher metal recoveries for Fe and TiO2 with an average of 90% for both
metals however at the expense of a lower iron grade of 39%,
A series of grind versus magnetic recovery tests were also undertaken to analyse the effect of
mineral liberation on Fe and TiO2 recovery and grade.. Each of the ores were ground to
P80 212m, 150m, 75m and 53m size fractions and then subjected to wet magnetic
separation at 500, 3000 and 5000 gauss. At 500 gauss the results shows that the 53m grind

Page: 13
size produce a higher Fe grade content. However at 3000 gauss some of the results show
that a coarser grind size of 75m or even 150m could produce a higher grade. The TiO2
does not seem to be sensitive to grind size and the results indicate that at a liberating size of
150m can be targeted.
4.3.4
Gravity Separation
A number of samples were processed by gravity methods in order to assess the recovery of the
ferro-titanium ilmenite fraction. . The tabling programme was conducted as a sighter test and at
a coarse grain size so metal recovery and metal liberation were not optimised.
All samples displayed good potential for gravity beneficiation. The specific gravity (SG) results
indicate that it was possible to have selective separation at SG over 4.0 and even close to 5.0.
At those densities the Fe and TiO2 metal recovery are 15% and 17% respectively with silica and
alumina Al2O3 grades below 3% and 4% respectively.
TiO2 grades up to 34% were achieved on the preliminary tests. It is expected that further
optimisation of process parameters and liberation could potentially produce a saleable titanium
concentrate up 50% TiO2, however further testwork is required.

Page: 14
FLOWSHEET DEVELOPMENT
5.1
Titano-Magnetite Concentrate
The titano-magnetite ores form a niche market, with specialty smelters used to recover the
iron, titanium and vanadium. These ores are beneficiated essentially similar to banded iron
formation ores, but usually are more easily upgraded via crushing and screening. A typical
titano-magnetite concentrate consists of 57% Fe, 12% Ti and 0.5% V.
The presence of titanium in a magnetite concentrate has historically been undesirable in the
iron making process as the titanium oxide has a very high melting point and the titanium rich
slag blocks conventional blast furnaces. With recent demand for iron ores and developments
in blast furnace technology, the processing of these titano-magnetite ores has become
economical.
The Panzhihua and Chengde steel mills (China) have successfully fed their blast furnaces
with 100% titano-magnetite for many years. Economic considerations are that the cost and
efficiency losses associated with the titano-magnetite feed are compensated by the sale of
value added by-products (titanium and vanadium). Typical ores used at these steel mills are
shown in Table 5.1_1.
Table 5.1_1
Typical Ores used at Panzhihua and Chengde
Product
Sizing
[m]
Panzhihua
Chengde High V
Chengde Low V
75
75
Fe
[%]
51
64.25
62
Tio2
[%]
10.7
2.5
8
V203
[%]
0.525
0.725
Al203
[%]
4.4
P
[%]
0.02
0.075
0.075
It is common practise that small amounts of titano-magnetite are added to conventional blast
furnace operations in order to preserve furnace linings and aid the steel making process.
More research and/or testwork will need to be conducted on the Projects titano-magnetite
material to determine its suitability for blast furnace operation. However, pig iron process route
(as described in Section 5.1), which uses conventional, proven technologies (rotary kiln, EAF and
vanadium recovery vessel) would eliminate the necessity to export the titano-magnetite
concentrate to be used in blast furnace operations.
For the Ilmenite concentrate, final concentrate grades of up to 34% TiO2 were achieved and it is
envisaged that further upgrade may be realized through gravity and/or high intensity magnetic
separation cleaning stages to achieve a potential final concentrate grade of approximately
50% TiO2 (as presented in the previous conceptual study). As for the titano-magnetite
concentrate, complementary testwork will also need to be conducted in order to investigate if a
saleable titanium dioxide slag can be produced during the smelting process.

Page: 15
Table 5.1_2 shows a high level mass balance based on the testwork results achieved in the
metallurgical programme as well as the assumption that cleaning stages will increase the TiO2
concentrate close to a final grade of 50%. The overall mass recovery of the primary
magnetite concentrate has been based on the DTR results obtained from the Ruoni deposit.
Table 5.1_2
Tete Project High level Mass Balance
Titano-magnetite Concentrate
As described in the mineralogy section the vanadium is included in the titano-magnetite
minerals and hence it is assumed that the vanadium recovery will follow those metals. To
recover the titano-magnetite a two stage magnetic circuit. (rougher-cleaner) at different gauss is
likely to be required. The primary circuit should operate at 500 gauss to recover the liberated
titano-magnetite and the 3000 gauss circuit should be used to recover the titano-magnetite from
the higher ilmenite fraction.
Ilmenite Concentrate
The magnetic separation process was selected to recover the magnetite minerals with the
vanadium mineral whilst eliminating as much of the contaminants as possible. From the
mineralogy report and the testwork programme results, additional iron units are present in the
non-magnetic fraction mainly in the form of ilmenite minerals. The testwork programme also
indicated the potential of using gravity beneficiation. As a result of this, good liberation of the
ilmenite minerals should enable the production of an ilmenite concentrate by using gravity
and/or magnetite separation.

Page: 16
Whilst not investigated as part of this study, the ilmenite concentrate could potentially be
upgraded by roasting to a titanium grade of in excess of 70%.
Figure 5_1 shows a conceptual flow sheet based on the results previously outlined and other
assumptions made in this report.
Figure 5.1_1
Tete Project Conceptual Flowsheet
Baobab Ressources
Tete project
Processing Plant Conceptual Flowsheet

Throughput:
Fe feed grade:
6,400,000 tpa
34.19 %
Crushing Circuit
Magnetic Separation Circuit

Gauss intensity: 500 Gauss
Stock pile
Milling Circuit
May required regrind to 53 um
Gauss intensity: 3000 Gauss
Tails of the magnetic circuit
Gravity Circuit
Titano-magnetite concentrate
Gravity Circuit Tails
Or Gravity Circuit
High Intensity
Magnetic Separation Circuit
Gauss intensity: 10,000 Gauss
High Intensity Magnetic Circuit Tails
Ilmenite concentrate
Dewatering Circuit
Dewatering Circuit
Processing Plant Residues

To Tailing Storage Facility
Titano-m agnetite
3.0Mtpa
Ilm enite / TiO2

500ktpa
Roaster Process
OPTIONAL
Rail Transport of Concentrate
A review of the Scoping Study Testwork Report by METS (February 2009) indicated that
samples from Caangua and Chitongue had similar mineralogical content (magnetite and

Page: 17
ilmenite) and mineral association as that of the Chitongue Grande, Chimbala and South Zone
deposits.
The previous testwork also indicated a higher weight recovery for the titano--vanadium
concentrate, which may improve overall weight recovery of a blended feed in the proposed
processing plant.
A crushing plant utilising a gyratory crusher with a nominal throughput of 6.4Mtpa would
convey crushed ore to stockpile / silo arrangement hat would feed the grinding circuit at a
constant rate. The grinding circuit would produce a nominal 75micron product via a SAG mill
and ball mill circuit, each configured in closed circuit using cyclone classification.
The first two beneficiation steps would consist of a low intensity (500 Gauss) and a high
intensity (3,000 Gauss) magnetic separation circuit to recover the titano-magnetite mineral.
The titano-magnetite concentrate would also contain a significant quantity of the vanadium
present in the ore. The concentrate would be dewatered using a filter (disc filter) to achieve
approximately 8% moisture. The disc filter product would be stored in a stockpile / silo
arrangement adjacent to the rail / transport system. Titiano-magnetite concentrate production
is estimated at 3.0Mtpa based on preliminary assumptions.
The second beneficiation step would consist of a gravity circuit (spirals) that would remove a
portion of the gangue material present in the tails from the first beneficiation step. The gravity
concentrate would then be fed through a high intensity (10,000 Gauss) magnetic separation
circuit where ilmenite and haematite minerals would be recovered as an ilmenite concentrate.
The ilmenite concentrate would also be dewatered using a filter (disc filter) to achieve
approximately 8% moisture. The disc filter product would be stored in a stockpile / silo
arrangement adjacent to the rail / transport system. Ilmenite concentrate production is
estimated at 500,000tpa based on preliminary assumptions.
The final tailings would be thickened and stored in a tailings facility, whilst the thickener
overflow water would be reutilised in the process.
5.2
Smelting & Refining

The second option investigated as part of the study included the potential refining of the
primary titano-magnetite concentrate onsite to produce pig iron directly. This would include
agglomeration, direct reduction and smelting of the concentrate where the iron and vanadium
are recovered to pig iron and vanadium pentoxide slag products respectively.
The proposed option includes the treatment of approximately 3.6Mtpa of feed to produce
~1.7Mtpa of titano-magnetite concentrate. The concentrate will then be refined onsite to
produce approximately 1.0Mtpa of pig iron. Further metallurgical test work is required to
assess the potential grade and quantity of the vanadium slag production and, as such, it has
been excluded from the economic analysis as shown in Section 9.

Page: 18
A separate smelting and refining conceptual study was undertaken in 2010 regarding the
potential processing options and products.
The main areas investigated in the aforementioned report are listed below:
Smelting and Refining of the titanium magnetite concentrate
Smelting and Refining of the ilmenite concentrate
Infrastructure
Estimates of operating and capital costs
Financial Analysis
A conceptual flowsheet proposed for the production of pig iron, vanadium pentoxide and
titanium concentrate products ore is shown below in Figure 5.2_1.
Whilst not investigated as part of this study, the titanium concentrate could be further
processed to produce a titanium pigment.
Figure 5.2_1
Tete Project Conceptual Flowsheet
Pig Iron and Ti Pigment Production
Ore from Mine
Circuit Tails
Processing plant
Titano-Magneite Concentrate
Direct Reduction
Smelting
Titanium Dioxide Slag Production
Optional
Pig Iron and Vanadium Pentoxide

Ti Pigments
Page: 19
The iron making technology utilises rotary kilns for the direct reduction of the ore, an electric
smelter and a vanadium recovery unit (see Figure 5.2_2 below). This technology is proven for
the processing of ores of similar specification to the Projects ore and is in operation in many
plants worldwide such as NZ Steel, plants in South Africa (Highveld, Scaw Metals and Arcelor
Mittal (former ISCOR).and in many plants in India and China.
Figure 5.2_2
Typical Pig iron Smelting Process
5.3
Design Criteria
The design criteria have been determined based on the conceptual flow sheet and a number
of assumptions. The design criteria were then used to establish the capital and operating cost
estimates. Figure 5.2_1 shows the assumptions and parameters used in establishing the
design criteria.

Page: 20
Figure 5.2_1
Tete Project Conceptual Design Criteria
Primary Crushing
Operating Schedule
ROM Feed
Crushing Circuit
Operating Days Per Year
Operating Hours Per Day
Effective Crusher Utilisation
Effective Operating Hours Per Annum
Required average primary crushing rate
Daily Production Rate
Milling
Design (based on ore contribution)
tpa
Stages
no
h
%
h
tph
t
6,400,000
1
365
24
70%
6,132
1044
17,534
Bond Index (rod)

Bond Index (ball)
Primary F80
Primary P80
Secondary P80
kWh/t
kWh/t
micron
micron
micron
kWh/t
kWh/t
15.5
13.0
12,000
200
75
8.3
5.8
no
no
no
%
h
tph
tpd
365
7
24
92%
8059
794
17534
tph
tph
%
%
tph
tph
tpa
tpa
Wet drum magnetic separators

794.1
814
35%
44%
347.0
447.1
2,796,800
3,603,200
tph
no.
m3/hr
220
3.6
1454
tph
% solids
%
tph
tph
tpa
tpa
Wet drum magnetic separators

347
35%
7.5%
26
321
209,760
2,587,040
tph
no.
m3/hr
220
1.6
682
tph
tpa
% of tons milled
% of ROM tons
%Fe mag
%
373.1
3,006,560
47.0%
47%
69.0%
80%
tph
% solids
%
tph
tph
tpa
tpa
Gravity Spiral
421
16%
60.0%
253
168
2,036,064
1,357,376
tph
no.
m3/hr
2.5
168.4
5
tph
% solids
%
tph
tph
tpa
tpa
WHIMS
253
40%
25.0%
63
189
509,016
1,527,048
tph
no.
m3/hr
100.0
2.5
172
tph
tpa
% Solids
m3/h
358
2,884,424
2.60
13.5%
1,021
no.
m
m
m3
m3
t/m3
t
t
days
no.
t
2
12
25
2,827
2,500
2.40
6,000
12,000
1.15
1
57,660
Primary Specific Power kWh/t

Secondary Specific Power kWh/t
Operating Schedule
Days Per Year
Days per Week
Hours Per Day
Availability
Effective Operating Hours per Year
Design Treatment Rate
Primary Magnetic Separation
Type
Total Feed
Total Feed (incl HP water)
Feed density to separators (incl HP water)
Weight Recovery to mag sep concentrate
Total primary mag sep concentrate
Total primary mag sep tailings
Total primary mag sep concentrate
Total primary mag sep tailings
No of mag sep units
Capacity per mag separator
No. of units required (based on solids rate)
Injection water mag sep circuit- operating
Secondary Magnetic Separation
Type
Total Feed
Feed density to separators (incl HP water)
Recovery to mag sep concentrate
Total mag sep concentrate
Total secondary mag sep tailings
Total mag sep concentrate
Total secondary mag sep tailings
No of mag sep units
Capacity per mag separator
Injection water mag sep - operating
Final Magnetic Concentrate
Total Concentrate Production
Total Concentrate Production
Concentrator weight recovery
Concentrate Grade
Iron Recovery
Titanium rougher circuit
Type
Total Feed
Feed density to gravity circuit (incl HP water)
Weight Recovery
Total gravity concentrate
Total gravity tailings
Total gravity concentrate
Total gravity tailings
No of spiral units
Capacity per spiral separator
Injection water spiral - operating
Titanium cleaner circuit
Type
Total Feed
Feed density to WHIMS circuit (incl HP water)
Weight Recovery
Total WHIMS concentrate
Total WHIMS tailings
Total WHIMS concentrate
Total WHIMS tailings
No of spiral units
Capacity per spiral separator
Injection water WHIMS - operating
Final Tailings
Total Tailings Solids
Total Tailings Solids
Tailings Solids Specific Gravity
Tailings Pulp Density
Tailings Pulp Flow
Concentrate Bulk Storage
No. of silos required
Diameter
Height
Approx volume
Live capacity
Filtered concentrate bulk SG
Capacity/silo
Total capacity
No of Days production
Concentrate shipping (ships loaded/week)
Concentrate loaded per ship

Page: 21
MARKET ANALYSIS
6.1
Pig Iron
6.1.1
Introduction
Historically pig iron was and is still produced as an overflow product from the blast furnace
(BF) iron making process. Today the pig iron demand is driven by electric arc furnace (EAF)
plants, which value the beneficial effects of adding pig iron to their operation in order to add
value beyond the basic price of iron units. The beneficial effects of pig iron are listed below:
High density feedstock, therefore less charging and handling time.
Consistent quality and low residual content.
Dilutes impurities in scrap.
Better slag foaming.
Controlled C content, consistent C recovery.
N2 scavenger = low N2 content in steel.
Easier on hearth refractory & electrodes.
These benefits result in a consistent higher price of pig iron compared to scrap (see
Figure 6.1.1_1 below) with minor exceptions, which were of short duration.
Figure 6.1.1_1
Pig Iron, Scrap Metal and Coal Prices 2009 to 2011
$600
USD
$500
$400
Pig Iron
$300
Scrap
$200
Thermal Coal
$100
20
09
M
20
1
09
M
20
3
09
M
20
5
09
M
20
7
09
20 M9
09
M
20 1 1
10
M
20
1
10
M
20
3
10
M
20
5
10
M
20
7
10
20 M9
10
M
20 1 1
11
M
20
1
11
M
20
3
11
M
5
$0
Source: steelonthenet, 2011
6.1.2
Market Size:
The pig iron market size is continuously growing and has reached a total of 73Mtpa, where
most of the market is dominated by the Chinese domestic market (55Mtpa). About 7Mtpa of
pig iron is produced in countries like Brazil, EU, India, Japan, Russia and South Africa and is
used for the local market. The international export market size is about 11Mtpa, which is

Page: 22
mainly driven by the cost of scrap in general, coal prices and the shortage in availability of low
residual scrap. New pig iron plant installations will find a demand for continuous supply to
EAF operations on a long term contract basis. For the market in Mozambique, including the
Project, it is envisaged that the pig iron supply will most likely be absorbed by the local market
in the long run when downstream processing facilities will become available.
Main import markets for pig iron are the USA, followed by Italy, South Korea, China, Spain
and Japan. Steel traders cover the spot market for pig iron, which is dominated by Stemcor,
Cargill, Prime Carbon AG and Carbofer.
6.1.3
Pig Iron Price Development

On a macro-economic level the price of pig iron is driven by the increasing demand for crude
steel, which has been growing by 5% per annum (see Figure 6.1.3_1). The price of pig iron is
dependent on the raw material cost (iron ore, coking coal). It is noted that during the global
financial crises and any general world economic crisis the price of pig iron has had the
tendency to decline.
Figure 6.1.3_1
Pig Iron Demand 2000 to 2011
There is a clear trend of continuous pig iron price increase over the past ten years (see Figure
6.1.3_2,). This trend is also evident for the price of scrap metal.

Page: 23
2011 M1
2010 M7
2010 M1
2009 M7
2009 M1
2008 M7
2008 M1
2007 M7
2007 M1
2006 M7
2006 M1
2005 M7
2005 M1
2004 M7
2004 M1
2003 M7
2003 M1
2002 M7
2002 M1
2001 M7
$800
$700
$600
$500
$400
$300
$200
$100
$0
2001 M1
USD
Figure 6.1.3_2
Pig Iron Price 2001 to 2011
Source: steelonthenet, 2011
This pig iron price trend is influenced by a number of factors as follows:
6.2
New EAF plants are to come online over the next few years (Russia, Asia, Africa, China).
Local circumstances of demand and supply of scrap and in particular low residual scrap.
Freight cost.
Raw material cost (iron ore, thermal and coking coal).
Power cost (smelting of DRI).
Trader margin: this is zero for direct, long term contracts with EAF plants.
Iron Concentrate
The iron ore concentrate market is a mature market, which has been steadily increasing over
the last number of years to 120Mt in 2010 as shown in Figure 6.2_1.
Figure 6.2_1
Iron Ore Production 2005 to 2010
Source: USGS, 2011

Page: 24
Current pricing is approximately $110/t based on 62% Fe,
6.3
Titanium
Titanium is abundant on the earth after iron, aluminum, magnesium. Titanium ore (ilmenite
and rutile) is the raw material for production of titanium dioxide, titanium sponge, and synthetic
rutile. Ilmenite supplies about 92% of the worlds demand for titanium minerals.
About 94% of titanium mineral concentrates are consumed by domestic titanium dioxide
(TiO2) pigment producers (mostly for paint). The remaining 6% is used in welding rod
coatings and for manufacturing carbides, chemicals, and titanium metal and alloys.
In 2008, the global titanium minerals market was estimated at approximately 5.9Mt of TiO2
units, of which the pigment industry consumed 4.7Mt. Titanium sponge production, which is
used mainly in the aerospace industry, as well as other industrial applications, was estimated
at approximately 175kt in 2008.
Titanium minerals, rutile, ilmenite, leucoxene and synthetic rutile are the principal feedstock
for pigment production. Pigment is produced by one of two processes:
sulphate process, which involves the digestion of TiO2 feedstock in sulphuric acid
followed by a process of clarification, hydrolysis, filtration and calcination;
chloride process: chlorination of TiO2 feedstock followed by a process of purification and

oxidation.
Approximately 60% of pigment is now produced by the chloride process and 40% by the
sulphate process.
The TiO2 content of the various titanium minerals varies markedly (from less than 50% to over
95%) and it is the titanium dioxide content which mainly determines the value of the various
products. Synthetic rutile (SR) and titanium slag are beneficiated products derived from
ilmenite concentrate. The indicative TiO2 content of the main titanium products is shown
below:
Ilmenite (naturally occurring) 35%-65%
Leucoxene
65%-91%
Rutile (naturally occurring)
92%-96%
Synthetic rutile
87%-95%
Titanium slag
75%-85%
Upgraded slag
91%-95%
The current marketing specifications and prices for the different titanium concentrate products
are understood to be as follows:

Page: 25
Ilmenite concentrate:
$150/t
Synthetic Rutile (70 Ti):
$700/t
Synthetic Rutile is a rutile substitute produced by upgrading the titanium dioxide

content of ilmenite. This occurs through a reduction process. Synthetic rutile is
converted into titanium dioxide by pigment plants.
Ferrotitanium:
$4,000/t of concentrate
Ferrotitanium is a ferroalloy, an alloy of iron and titanium with between 25% and
45% Ti for FeTi30 and 65% and 75% Ti for FeTi70 respectively, often with a minor
amount of carbon. Both are used in steelmaking as a cleansing agent for iron and
steel; the titanium is highly reactive with sulphur, carbon, oxygen, and nitrogen,
forming insoluble compounds and sequestering them in slag, and is therefore used
for deoxidizing, and sometimes for desulphurisation and denitrification.
In
steelmaking the addition of titanium yields metal with finer grain structure.
Ferrotitanium powder can also be used as a fuel in some pyrotechnic compositions.
Ferrotitanium can be manufactured by mixing titanium sponge and scrap with iron
and melting them together in an induction furnace.
New mining projects are being developed in Australia, Canada, Chile, India, Kenya,
Madagascar, Mozambique, Senegal, and South Africa.

Page: 26
PROJECT DEVELOPMENT
7.1
Introduction
Baobab commissioned the Australian infrastructure consultant URB Mining Logistics (URB) to
carry out a study with the primary objective to review the export options for Baobab's
products. The study was, in part, based on a site visit to Mozambique where discussions
were held with the Ministry of Transport, CFM (the operator of the rail line between Moatize
and Beira), the AMDCM (the coal association of Mozambique) and influential coal companies,
who are driving the development of the export options.
The Mozambique government will only allow an "Open Access" approach to any infrastructure
developments. To enforce this policy and other government interests the government
installed the institution of a Regulator.
In order to allow Baobab to secure its interest in the infrastructure developments and to be
informed about the export developments Baobab has submitted a Letter of Intent to join the
AMDCM as a member.
Resource definition is based on drillhole information from three areas, providing a resource
base of 267Mt for the Project. However, the Ruoni North prospect, with a resource of 93Mt, is
sufficiently large to act as a standalone project in its own right. In addition, preliminary drilling
results indicate that the Tenge deposit, which is adjacent to Ruoni North, will exhibit a similar
grade tenor and possibly will yield a larger tonnage.
As per Baobabs advice it was assumed that mining will be undertaken by a mining contractor.
The Study provides a general discussion of typical items that would need to be considered for
project development. Environmental, social and legal aspects of the project are not discussed
in this report as they did not form part of the scope of work.
7.2
Mining
It is assumed for the purpose of the study that a conventional open pit method, drill and blast
followed by load and haul, would be employed at the Project. Drilling and blasting will more
than likely be performed on benches between 10m and 15m in height. Depending on the
scale of mining, the mining fleet would most likely consist of between 180t and 400t sized
hydraulic excavators, 100t to 220t off highway dump trucks and standard opencut drilling and
auxiliary equipment.
7.3
Processing
For the purpose of this study two scenarios were evaluated, namely:
Producing concentrate only, comprising a titano-magnetite iron ore concentrate and an

ilmenite concentrate.
Producing pig iron and an ilmenite concentrate.
Refer to Section 4 and Section 5 for further detail.

Page: 27
7.4
Infrastructure
The government of Mozambique is well aware of the deficiencies of its infrastructure and it
continues to push forward with the development of major infrastructure works with the aid of
the World Bank, the European Investment Bank (EIB), the International Finance Corporation
(IFC) and others.
Numerous major projects, such as the rehabilitation of the Beira corridor have commenced,
whilst the Mozal aluminium smelter and hydro electric generation station Cahora Bassa
(CBHP) and the 1,500 MW Mphanda Nkuwa hydropower project have been completed.
Baobab will need to follow these developments closely in order to identify how they can
facilitate the development of the Tete project, and in particular how the timetable of the said
developments will affect the development schedule for the Project.
7.4.1
Roads
Regional Roads
The primary road supply link will be from South Africa. The trucking duration between
Johannesburg, South Africa, and the Tete region is currently 3 to 5 days.
Despite investments of ~US$1 billion in road infrastructure since 2005, regional roads in
Mozambique range from very good to very poor condition. However, potholing is limited on
the main roads. Hence the existing infrastructure should meet the mines requirements.
Local Roads
The current project access is via an all-weather formed, unsealed road branching off from the
Zambia highway to the Masamba village at the northern limit of the project area. Access
within the project area is via unformed tracks. These roads/tracks will be limited and
unsuitable for mining operations. The mine would have to construct or upgrade any roads to
be used. It is assumed that a total of 6km of gravel service roads would be required on or
around the mine. The roads would be constructed above the existing levels to ensure road
stability during the Mozambique rainy season, with construction only possible during the dry
season.
7.4.2
Port
The port of Beira is currently being refurbished to accommodate the coal production around
Tete. Investment is also going into upgrading the port of Nacala.
Riversdale Mining is looking at barging opportunities on the Zambezi and reportedly has the
backing of both the Mozambique and Malawi governments.
The government has launched three task forces to move the development of coal export
options forward. It is understood that these three task forces have been mandated to review
the expansion options at Beira and Nacala and an additional deep water port in and around
Zalala at different time horizons as summarised in Table 7.4.2_1.

Page: 28
Table 7.4.2_1
Port Development Timeline
Port
Task force 1
Beira
Nacala
Task force 2
Beira
Option 1
Option 2 (if Cape size vessels feasible)
Nacala
Zalala
Task force 3
Beira
Option 1
Option 2 (if Cape size vessels feasible)
Nacala
Zalala
Capacity [Mtpa]
Target
20
18
2014
25
40
30
25
25
40
30
75
2016 / 2017
2025
An order of magnitude study (OMS) was completed for the proposed Zalala port by a
consortium composed of Rio Tinto, Minas de Revuboe and Ncondezi. It is understood that
the option of developing a port at Zalala is driven by the fact that it would free up capacity at
Beira and Nacala.
7.4.3
Rail
The entire network is under-resourced and in average to poor condition. There is a general
shortage of locomotives, wagons and infrastructure. Efforts to improve the rail networks are
gaining momentum but may be some way off, although it is understood that the Sena railway
connecting Tete to the port of Beira is being refurbished. The Nacala railway corridor, linking
the port of Nacala to the interior, is also in the process of being refurbished.
Furthermore, a dedicated heavy haulage corridor linking the proposed port of Zalala with Tete
was reviewed in the OMS mentioned above.
7.4.4
Airport
The closest regional airport is at Tete. It is substantial and suitable for commercial and cargo
aircraft.
7.4.5
Workshop and Support Facilities

A workshop infrastructure would be require for the maintenance of the haul trucks, crushing
plant, rail load-out stations, stockyard facilities, service vehicles and surface infrastructure.
The nearest reasonable support industries are located in Tete.
Other infrastructure would include offices, change house, first aid clinic, capital stores, general
stores, logistical control, fuel storage, wash bays and security.

Page: 29
7.4.6
Water Supply
The region is generally a wet region in southern African terms. Water is generally obtained
from boreholes or local rivers. It has been assumed that water is reasonably easily obtained
on or near the proposed mine and potable water treatment will be required. The Zambezi
River runs through Tete, some 60km south of the Project.
Water usage authorisation permits would need to be considered.
7.4.7
Electricity Supply
Power is readily available from the Cahora Bassa hydroelectric scheme with an additional
scheme on the Zambezi in advanced planning stages. Coal fired power plants have also
been proposed for Moatize and Benga.
Low tariff hydro-electric power is readily available from the 2,075MW Cahora Bassa dam, with
an additional 1,500MW scheme at Mphanda N'kuwa, also on the Zambezi, in advanced
planning stages (anticipated production in 2015).
Coal fired power plants have been proposed for Moatize and Benga. Riversdale has
announced that the Benga power station will commence production in 2013 at an initial
capacity of 500MW with the option to expand to 2,000MW.
The distance from Baobabs mine site to the substation in Tete is 43 km.
The general power distribution grid of Mozambique is shown in Figure 7.4.7_1.

Page: 30
Figure 7.4.7_1
Overview of Mozambique Power Distribution Grid
7.4.8
Coal Supply
The Project is surrounded by a number of tier one thermal and coking coal projects, mainly
represented by Rio Tinto, who took control over Riversdale Mining in April 2011 in a $4 billion
takeover, Brazils mining giant Vale (Vale announced at the end of October 2011 that the
second phase of their Moatize project in the Tete Province is expected to be concluded in
2014 and will represent an investment of US$1.658 billion.), REVUBOE (a Joint Venture of
Talbot Group, Nippon Steel and Posco) and Ncondezi.
The Project will be able to source cheap thermal coal ex works from any of the above
mentioned companies. Since the coal companies focus will be on the financially more
lucrative coking coal export, Baobab will have an abundance of thermal coal available.
Price development for coking coal and thermal coal are shown in Figure 7.4.8_1 and Figure
7.4.8_2 respectively.

Page: 31
Figure 7.4.8_1
Coking Coal Price 1996 to 2011
Source: steelonthenet,2011
Figure 7.4.8_2
Thermal Coal Price 1996 to 2011
Source: steelonthenet,2011

Page: 32
OPERATING AND CAPITAL COST ESTIMATES
8.1
Introduction
Due to the limited information available for the Project, the accuracy of the costs presented in
the following sections are at a scoping level only and are considered to be within an accuracy
of 40% to 50%.
All costs are denominated in United States of America dollars, unless specifically stated
otherwise.
8.2
Operating Costs
The primary operating costs comprise the following cost centres:
Processing
Mining
General and Administration
Rail
Port
Table 8.2_1 provides a summary of the operating costs estimates for the two milling rates that
have been investigated for this study. The lower mill throughput rate of 3.7Mtpa is associated
with the product scenario of producing 1Mtpa of pig iron, whilst the higher mill throughput rate
of 6.4Mtpa is associated with the product scenario of producing 3Mtpa of magnetite
concentrate.
Power costs were based on hydro power supplied by the Cahora Bassa dam at $0.06/kWhr,
whilst the cost of coal was based on $90/t (ex-works from a nearby plant).
Table 8.2_1
Summary Site Operating Costs
Cost Centre
Processing
Smelting & Refining
Contract mining
Mine supervision
General and administration
Rail
Port

Unit
Mill Throughput (Mtpa)
[$/t milled]
[$/t conc]
[$/t mined]
3.7
5.75
57.00
3.00
6.4
5.40
[M$/yr]
[$/t conc]
[$/t conc]
6
15
7
8
15
7
2.50
Page: 33
Table 8.2_2 shows a breakdown of the processing operating costs that were developed for
the two mill throughputs investigated.
Table 8.2_2
Summary Processing Operating Costs Estimate
Processing cost [US$/t Mill Feed]
Item
Power
Crusher liners
Mill Liners
Mill Balls
Flocculants
Water Supply
Labour Cost/t milled
Other
Contingency
Total
8.3
3.7Mtpa
6.4Mtpa
1.80
0.20
0.30
1.70
0.10
0.25
0.45
0.20
0.75
5.75
1.80
0.20
0.30
1.70
0.10
0.25
0.45
0.10
0.50
5.40
Capital Costs
The primary capital costs comprise of the following cost centres:
Processing
Infrastructure
Mining
Rail
Port
Feasibility Study
Table 8.3_1 provides a summary of the capital costs estimates for the two milling rates that
have been investigated for this study.

Page: 34
Table 8.3_1
Summary Capital Costs
Cost Centre
Mill Throughput (Mtpa)
Unit
Infrastructure
Concentrator
Smelting & Refining
Mining
Rail
Port
Feasibility Study
Total
3.7
32
130
390
3
90
5
20
670
[M$]
[M$]
[M$]
[M$]
[M$]
[M$]
[M$]
[M$]
6.4
32
200
Nil
5
170
5
20
432
It was assumed that the existing port facilities will be upgraded by the port authority and the
port capital cost shown in Table 8.3_1 is associated with the mobile equipment required to
load and haul the material onto the ship loader feed.
The capital cost estimates for the concentrator facility are based on typical magnetite
operations constructed in remote locations. The power requirement has been estimated at
30Kwh/t of mill feed. Table 8.3_2 provides further detail for the concentrator capital cost
estimates.
Table 8.3_2
Concentrator Capital Costs Estimate
Item
Unit
Mill Throughput [Mtpa]

3.7
6.4
15.6
8.9
35.6
23.7
4.6
2.8
4.6
15.6
22.2
1.5
8.2
44.5
8.2
1.9
200
Primary Crushing
[M$]
10.2
Crushed Stockpile & Reclaim

Primary Grinding
[M$]
[M$]
Secondary Grinding
[M$]
Magnetic Separation
[M$]
Gravity Separation
[M$]
High Intensity Magnetic Separation
[M$]
Thickening
[M$]
Filtration
[M$]
Overland Conveying
[M$]
Tailings Disposal
[M$]
Final Stockpile, Reclaim & Loadout
[M$]
Workshops
[M$]
Laboratory
[M$]
Total (rounded to nearest $5M)
[M$]
5.9
23.4
15.6
3.0
1.8
3.0
10.2
14.6
1.0
5.4
29.3
5.4
1.2
130

Page: 35
The infrastructure capital cost estimate was based on similar scale operations in a remote
area and includes an electrical power distribution allowance of $0.5 million per kilometre,
assuming a 40km distance from the main power source.
The rail capital cost estimate was based on $1 million per kilometre, again assuming a 40km
distance to the nearest rail network at Tete.
Working capital was set at $16 million, covering the first six weeks of operating expenditure.
Furthermore, sustaining capital was based on 2% of the total initial capital expenditure, which
equated to $13 million per annum for the pig iron scenario and $9 million per annum for the
3Mtpa concentrate scenario.

Page: 36
PROJECT ECONOMICS
9.1
Introduction
The Project economics were based on the Ruoni North resource as described in Section 3.3.
Two main product scenarios were evaluated, namely:
Scenario A: Producing 3Mtpa of titano-magnetite concentrate.
Scenario B: Producing 1Mtpa of pig iron.
For both of these scenarios an ilmenite concentrate is also produced.

Furthermore, it was assumed that any credits associated with a vanadium by-product will be
off-set by any penalties incurred as a result of the titanium in the magnetite concentrate.
Similarly, further work is required before the economics of a vanadium slag by-product in the
pig iron process may be modelled accurately and has therefore not been considered at this
stage.
Preliminary Whittle Four-X pit optimisations were undertaken based on the economic inputs
as described below. The mine production schedules used to develop the cash flow model
were based on the pit shells generated by Whittle Four-X.
9.2
Cash Flow Inputs
9.2.1
Commodity Prices
The commodity price assumptions as shown in Table 9.2.1_1 were used for the economic
analysis.
Table 9.2.1_1
Commodity Price Assumptions
Commodity
Unit
Value
Pig iron
[$/t]
450
[$/t conc]
90
Titanium magnetite Concentrate

Iron ore
TiO2
9.2.2
[$/t conc.] 150.00
Operating and Capital Costs

The operating and capital cost estimates adopted for the cash flow modelling are as per
Section 8.

Page: 37
9.2.3
Other Cash Flow Inputs

Government Royalty
In discussion with Baobab a government royalty of 3% on revenue was assumed.
Discount Rate
A discount rate of 10% was adopted for the base case cash flow analysis.
Taxation and Gearing
A 32% tax rate was applied to the cashflow model.
The cash flow was based on the premise of 100% equity funding, i.e. no debt facility or ungeared.
9.3
Cash Flow Model Results
9.3.1
Scenario A: Based on 3Mtpa Concentrate Production

Based on the current resource base and on the economic parameters described in
Section 9.2, the process design criteria as described in Section 5.2 and a mill throughput of
6.4Mtpa, a base case cash flow model was developed.
Table 9.3.1_1 below provides a summary of the Scenario A base case cash flow model.

Page: 38
Table 9.3.1_1
Summary Base Case Cash Flow Model
Scenario A - Producing 3Mtpa of Concentrate
Item
Physicals
Total Material
Waste
Strip Ratio (average)
Mill Feed
Tonnes
Fe
Mass recovery
Concentrate production
Fe in concentrate
Mass recovery
Gross Revenue
Royalty
Net Revenue
Operating costs
Capital Cost
Financials
Initial
Sustaining
Cashflow
- After tax
IRR
- Before tax
- After tax
Mine life
Unit
Value
Mt
Mt
w:o
Mt
%
295
200
2.1
94.2
34.8
%
Mtpa
%
47.3
3
58
%
Mtpa
US$M
US$M
US$M
US$M
US$M
US$M
US$M
8
0.5
5,133
154
4,979
2,735
448
101
1,695
467
247
28
21
3.9
15
US$M
%
Yr
Yr
It is noted that close to 80% of the revenue is derived from the titano-magnetite concentrate
sales, with the balance of 20% derived from the ilmenite concentrate sales.
Sensitivity Analysis
A sensitivity analysis has been undertaken to examine the project sensitivity to changes in key
economic parameters. The results are summarised in Table 9.3.1_2 and Table 9.3.1_3
below, and presented diagrammatically in Figure 9.3.1_1.
The Project is most sensitive to a change to the Fe price. The next level down in sensitivity is
a change to the ilmenite concentrate price, followed by the mine operating costs, rail cost and
concentrator operating cost.

Page: 39
Table 9.3.1_2
Scenario A - Sensitivity Analysis Input Parameters
Change
Fe concentrate
price
Ilmenite
concentrate
price
Concentrator
opex
Mining
opex
Rail
opex
G&A
opex
Initial
Capex
Discount
rate
[%]
60%
[$/t conc]
144.0
[$/t conc]
240.00
[$/t milled]
8.64
[$/t]
4.80
[$/t
conc]
24.00
[M$
pa]
9.60
[M$]
717
[%]
16.0%
40%
126.0
210.00
7.56
4.20
21.00
8.40
627
14.0%
20%
108.0
180.00
6.48
3.60
18.00
7.20
538
12.0%
0%
90.0
150.00
5.40
3.00
15.00
6.00
448
10.0%
-20%
72.0
120.00
4.32
2.40
12.00
4.80
359
8.0%
-40%
54.0
90.00
3.24
1.80
9.00
3.60
269
6.0%
-60%
36.0
60.00
2.16
1.20
6.00
2.40
179
4.0%
Table 9.3.1_3
Scenario A - Summary Sensitivity Analysis Results
Change
[%]
60%
40%
20%
0%
-20%
-40%
-60%
Net Present Value @ 10.0%

[$ million]
(Before tax)
Fe
concentrate
price
1,360
1,062
764
467
169
-129
-426

Ilmenite
concentrate
price
712
630
548
467
385
303
222
Concentrator
opex
Parameter
Mining
opex
Rail
opex
G&A
opex
Initial
Capex
Discount
rate
351
390
428
467
505
544
582
269
335
401
467
533
599
664
281
343
405
467
529
590
652
437
447
457
467
477
486
496
248
321
394
467
540
613
686
205
273
359
467
604
780
1,007
Page: 40
Figure 9.3.1_1
Summary Sensitivity Analysis Results
Scenario A 3Mtpa Concentrate
1,000
500
-60%
-40%
-20%
0%
-500
-1,000
Percent change from base case

Fe Concentrate price
Mining opex
Capex
9.3.2
20%
40%
60%
NPV(10%) after Capex, before Tax

[US$ million]
1,500
Ilmenite concentrate price

Rail opex
Discount rate
Concentrator opex
G&A opex
Scenario B: Based on 1Mtpa Pig Iron Production

Based on the economic parameters described in Section 9.2, the process design criteria as
described in Section 5.2 and a mill throughput of 3.7Mtpa, a base case cash flow model was
developed.
Table 9.3.2_1 below provides a summary of the Scenario B base case cash flow model.

Page: 41
Table 9.3.2_1
Summary Base Case Cash Flow Model
Scenario B - Producing 1Mtpa of Pig Iron
Item
Physicals
Total Material
Waste
Strip Ratio (average)
Mill Feed
Tonnes
Fe
Mass recovery
Concentrate production
Fe in concentrate
Pig Iron production
Mass recovery
Gross Revenue
Royalty
Net Revenue
Operating costs
Capital Cost
Financials
Initial
Sustaining
Cashflow
- After tax
IRR
- Before tax
- After tax
Mine life
Unit
Value
Mt
Mt
w:o
Mt
%
286
197
2.2
89.4
34.8
%
Mtpa
%
Mtpa
47.3
1.7
58
1
%
Mtpa
US$M
US$M
US$M
US$M
US$M
US$M
US$M
8
0.3
12,101
363
11,035
4,571
690
297
6,180
1,361
892
34
27
3.1
25
US$M
%
Yr
Yr
It is noted that close to 90% of the revenue is derived from the pig iron sales, with the balance
of 10% derived from the ilmenite concentrate sales.
Sensitivity Analysis
A sensitivity analysis has been undertaken to examine the project sensitivity to changes in key
economic parameters. The results are summarised in Table 9.3.2_2 and Table 9.3.2_3
below, and presented diagrammatically in Figure 9.3.2_1.
The Project is most sensitive to a change to the Fe price. The next level down in sensitivity is
a change to the ilmenite concentrate price, followed by the mine operating costs, rail cost and
concentrator operating cost.

Page: 42
Table 9.3.2_2
Scenario B - Sensitivity Analysis Input Parameters
Conc
opex
Smelt&Ref
opex
Mining
opex
Rail
opex
G&A
opex
Initial
Capex
Discount
rate
[$/t conc]
240.00
[$/t
milled]
8.64
[$/t conc]
91.20
[$/t]
4.80
[$/t
conc]
24.00
[M$
pa]
9.60
[M$]
1104
[%]
16.0%
630.0
210.00
7.56
79.80
4.20
21.00
8.40
966
14.0%
540.0
180.00
6.48
68.40
3.60
18.00
7.20
828
12.0%
0%
450.0
150.00
5.40
57.00
3.00
15.00
6.00
690
10.0%
-20%
360.0
120.00
4.32
45.60
2.40
12.00
4.80
552
8.0%
-40%
270.0
90.00
3.24
34.20
1.80
9.00
3.60
414
6.0%
-60%
180.0
60.00
2.16
22.80
1.20
6.00
2.40
276
4.0%
Change
Pig Iron
price
Ilmenite
concentrate
price
[%]
60%
[$/t conc]
720.0
40%
20%
Table 9.3.2_3
Scenario B - Summary Sensitivity Analysis Results
Change
Net Present Value @ 10.0%

[$ million]
(Before tax)
Smelt
&Ref
opex
Parameter
Mining
opex
Pig Iron
price
Ilmenite
concentrate
price
Conc
opex
60%
3,132
1,528
1,276
956
1,251
1,279
1,334
1,006
618
40%
2,542
1,472
1,304
1,091
1,288
1,306
1,343
1,124
802
[%]
Rail
opex
G&A
opex
Initial
Capex
Discount
rate
20%
1,951
1,416
1,332
1,226
1,324
1,334
1,352
1,242
1,042
0%
1,361
1,361
1,361
1,361
1,361
1,361
1,361
1,361
1,361
-20%
770
1,305
1,389
1,495
1,397
1,388
1,369
1,479
1,792
-40%
179
1,249
1,417
1,630
1,433
1,415
1,378
1,597
2,386
-60%
-411
1,194
1,445
1,765
1,470
1,442
1,387
1,716
3,220
At the current pig iron price of $500/t the before tax NPV10% was estimated at $1,689
million.

Page: 43
Figure 9.3.2_1
Summary Sensitivity Analysis Results
Scenario B 1Mtpa Pig Iron
3,500
2,500
2,000
1,500
1,000
500
0
-60%
-40%
-20%
0%
20%
40%
-500
60%
NPV(10%) after Capex, before Tax

[US$ million]
3,000
Percent change from base case

Fe price
Mining opex
Discount rate

Ilmenite concentrate price

G&A opex
Smelting&Refining Opex
Concentrator opex
Capex
Rail opex
Page: 44
10
DISCUSSION
The economic analysis indicates that there is the potential to establish an economically viable
operation at the Tete Iron ore Project. This was based on the assumption that two
concentrates can be produced, namely a titano-magnetite and an ilmenite concentrate. The
analysis demonstrates that further processing on site through the production of pig iron
enhances the project economics. This is largely due to the Projects access to low tariff
hydro-electric power and close proximity to coal reserves.
The mineralisation at Tete includes significant amounts of vanadium. However, for the
purpose of the economic assessment no value was ascribed to vanadium in either the titanomagnetite concentrate or pig iron models. It was assumed that any credits associated with
vanadium would be off-set by the potential of penalties incurred as a result of titanium present
in the titano-magnetite concentrate. It is envisaged that vanadium slag could be extracted as
a final process in the smelting stage of the pig iron production. Additional metallurgical
testwork and capex/opex research is required before this stage could be incorporated into the
financial model, which has the potential effect of enhancing the overall project economics.
Whilst the current resource base is 267Mt, the most prospective resource that has been
delineated thus far is at Ruoni North, which has a resource of 93Mt. Ruoni North, exhibiting
both a high Fe head grade and a high mass recovery, forms the northern limb of an open,
gently plunging synform, with the contiguous prospects of Tenge and Ruoni South covering
the hinge and southern limb areas respectively.
Preliminary drilling results indicate that the Tenge deposit will exhibit a similar grade tenor to
Ruoni North and possibly will yield a larger tonnage.
Mineralised zones intersected in resource drilling at Ruoni South report lower head grades
and mass recoveries than Ruoni North (30% and 27% respectively), but substantially
improved concentrate characteristics (weighted average of significant intercepts reported to
date report 63% Fe, 1% V2O5 and 6.7% TiO2).
Based on the current resource base at Ruoni North and the preliminary drilling results at
Tenge and Ruoni South, Coffey believes that the Tenge/Ruoni area as a whole will have the
potential to generate sufficient resources to support a standalone operation with a mine-life in
excess of 30 years.

Page: 45
11
RECOMMENDATIONS
The scoping study was based on limited data and Coffey Mining believes that further work is
required to ascertain the true potential of establishing a viable project at Tete.
For ease of reference the recommendations have been separated into the following
headings:-
11.1
Resources.
Metallurgy and processing.
Infrastructure.
Mining.
Operating and capital cost estimates
Resources
Coffey Mining recommends that microscopy studies are undertaken at Tenge / Ruoni.
Since surface outcropping dyke material and mineralisation locally outcrops, Coffey Mining
recommends that field mapping data be incorporated in any future modelling.
Coffey Mining recommends that 5% of water displacement measurements be cross-checked
by physical measurements and that a similar quantity is checked by an independent external
source. No density measurements have been made on oxidised material. Coffey Mining also
recommends that density measurements of oxide material are taken as a matter of course.
Coffey Mining considers there may be merit in looking at spatial distributions of the lithophile
and chalcophile elements (perhaps with ratios of the same) and recommends that such a
study be carried out.
Coffey Mining recommends oxidation status be recorded during logging of RC chips.
Certain areas within Chitongue Grande and South Zone may be amenable to classification
upgrade with the addition of a minimal amount of check DD drilling. Coffey Mining
recommends this additional work be undertaken.
Preliminary drilling results indicate that the Tenge prospect, which is contiguous with Ruoni
North, will exhibit a similar grade tenor and possibly will yield a larger tonnage compared to
Ruoni North.
On the basis of the scoping study results, and drilling results received to date, additional infill
drilling is warranted at Tenge / Ruoni. This will increase the confidence level assigned to the
resource and permit upgrading the classification of some of the material to Indicated
Resource status.

Page: 46
11.2
Metallurgy and Processing

Coffey Mining believes that further metallurgical testwork studies are warranted in order to
better define the optimal process flow sheet and design criteria; thereby improving the order of
accuracy of the economic input parameters and thus providing a better and more robust
assessment of the economic viability of the Project. Most significantly is the inclusion of newly
identified resources such a Tenge / Ruoni and the further assessment and optimisation of
downstream processing options, particularly for the ilmenite concentrate.
Based on the assumptions previously mentioned and from the preliminary results of the
mineralogical assessment and DTR test work, the following metallurgical test work
programme is recommended:
Assess the current drilling data and confirm with the geological representatives the
metallurgical domains that are likely to display varying treatment requirements,
throughputs or blending strategies
Decide whether a metallurgical domain structure or a spatial domain structure is more

appropriate to the test work programme
Formulate composite samples that represent metallurgical or spatial domains. The

composite samples should have grade and impurity levels consistent with that of the
deposit. Ideally, approximately 300kg of material would need to be available for each
composite sample (although 100kg is sufficient if preliminary marketing samples are not
required) and approximately 50kg for each variability sample.
Determine the ore characteristics of the domain composites via mineralogical

examination
Determine the physical characteristics of the domain composites and the variability
samples (UCS, CWI, WI, AI, etc)
Determine the size by chemistry characteristics
Determine the size by specific gravity characteristics
Undertake conventional magnetic, gravity and screening separation test work, grind
establishment, screening, bulk density, heavy media separation, spirals, etc, and possibly
other test work, such as flotation separation where appropriate
Determine the settling and filtration characteristics of the concentrate and reject
components of the composite samples
Produce concentrate samples as may be required for marketing test work, etc
Undertake pelletising and smelting testwork on magnetite concentrate if the on-site pig
iron production scenario is to be pursued.
Develop key design criteria and provide conceptual flow sheet for engineering design

Page: 47
11.3
Infrastructure
The principal infrastructure items can be broken down into the following categories:
Port.
Rail.
Power.
Water.
Site.
For the purpose of the Study it was assumed that the rail and power facilities will essentially
be available for the Project, with minimal financial contribution by Baobab. This assumption
will need to be confirmed and Baobab will need to follow the current proposed major
infrastructure works closely in order to identify how they can facilitate the development of the
Tete project, and in particular how the timetable of the said developments will affect the
development schedule for the Project.
11.4
Mining
The Study assumed contract mining as advised by Baobab, however, Coffey Mining
recommends that an owner mining scenario is investigated, as currently a sufficiently large
resource base has been delineated that will justify this approach.
11.5
Operating and Capital Cost Estimates

Further work is required to take the operating and capital cost estimates to a Pre-feasibility
level of accuracy.

Page: 48

Tete Iron Ore Project Scoping Study PDF

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Scoping Study

Baobab Mining Services Pty Ltd

Tete Iron Ore Project

Baobab Mining Services Pty Ltd

RE: Scoping Study Tete Iron Ore Project

For and on behalf of Coffey Mining Pty Ltd

Coffey Mining Pty Ltd ABN 52 065 481 209

Coffey Mining Pty Ltd

Manager Mining West Perth

Senior Consultant Metallurgy

Associate Resource Consultant

Baobab Mining Services Pty Ltd

Coffey Mining Perth

Document Review and Sign Off

Tete Iron Ore Project WPER672AJ

Coffey Mining Pty Ltd

Scope of Work .................................................................................................................. 3

Principal Sources of Information ...................................................................................... 3

Project Location .......................................................................................................................... 5

Geology and Resources ............................................................................................................. 6

Regional Geology ............................................................................................................. 6

Project Geology ................................................................................................................ 7

General Lithology .................................................................................................... 7

Chitongue Grande ................................................................................................... 7

South Zone .............................................................................................................. 7

Weathering and Oxidation ....................................................................................... 9

Resource Estimate ........................................................................................................... 9

Metallurgy and Processing ...................................................................................................... 11

Metallurgical Testwork Programme ................................................................................ 11

Bond and Abrasion Index Results ......................................................................... 12

Metallurgical Testwork Summary ................................................................................... 12

Magnetic Separation ............................................................................................. 13

Gravity Separation ................................................................................................. 14

Flowsheet Development ........................................................................................................... 15

Titano-Magnetite Concentrate ........................................................................................ 15

Smelting & Refining ........................................................................................................ 18

Design Criteria ................................................................................................................ 20

Market Analysis ......................................................................................................................... 22

Pig Iron ........................................................................................................................... 22

Market Size: .......................................................................................................... 22

Pig Iron Price Development ................................................................................... 23

Iron Concentrate ............................................................................................................. 24

Tete Iron Ore Project WPER672AJ

Coffey Mining Pty Ltd

Workshop and Support Facilities ........................................................................... 29

Water Supply ......................................................................................................... 30

Electricity Supply ................................................................................................... 30

Coal Supply ........................................................................................................... 31

Operating and Capital Cost Estimates .................................................................................... 33

Capital Costs .................................................................................................................. 34

Project Economics .................................................................................................................... 37

Cash Flow Inputs ............................................................................................................ 37

Commodity Prices ................................................................................................. 37

Operating and Capital Costs ................................................................................. 37

Other Cash Flow Inputs ......................................................................................... 38

Cash Flow Model Results ............................................................................................... 38

Scenario A: Based on 3Mtpa Concentrate Production .......................................... 38

Scenario B: Based on 1Mtpa Pig Iron Production ................................................. 41

Metallurgy and Processing ............................................................................................. 47

Operating and Capital Cost Estimates ........................................................................... 48

Tete Iron Ore Project WPER672AJ

Coffey Mining Pty Ltd

Table 4.2.3_1 Bond and Abrasion Index Results