EQUATORIAL SECURES ACCESS TO RAILWAY FOR MAYOKO-MOUSSONDJI IRON PROJECT

Transcription

1 EQUATORIAL SECURES ACCESS TO RAILWAY FOR MAYOKO-MOUSSONDJI IRON PROJECT PROTOCOL D ACCORD SIGNED HIGHLIGHTS Equatorial Resources Limited ( Equatorial or Company ) has signed an agreement ( Protocol D Accord ) with the state-owned and operated railway company Chemin de Fer Congo-Ocean ( CFCO ) which grants immediate access to Equatorial to use the Mayoko to Pointe-Noire rail line. The rail line is an operational heavy haulage railway system with considerable latent capacity that runs through Equatorial s 100% owned Mayoko-Moussondji iron ore project and leads directly to the established deep-water port at Pointe-Noire. The agreement commits both parties to enter into a formal User Agreement ( Convention d utlisation ) for the transport of iron ore from Mayoko to Pointe-Noire. The duration of this User Agreement will initially be for 25 years. Equatorial and CFCO acknowledge the railway line from Mayoko to Pointe-Noire is essential to the economic success of the Mayoko-Moussonji iron project and have agreed to cooperate and collaborate to successfully develop the transport of bulk commodities on the railway line. Equatorial will immediately commence a study on the railway to be based on stipulated conditions which, among others, commit Equatorial to operate the railway and make available excess capacity to other companies and users on normal commercial terms. RAILWAY AGREEMENT Equatorial is delighted to announce it has, through its wholly-owned subsidiary Congo Mining Ltd SARL, signed a Protocol D Accord, or Memorandum of Understanding, with the state-owned railway company CFCO which grants immediate access to Equatorial to use the Mayoko to Pointe-Noire rail line. The CFCO, which is administered by The Ministry of Transport for the Republic of Congo ( ROC ), is the owner of the Mayoko to Pointe-Noire rail line. The rail line in its current form was designed and built by Comilog for the transport of manganese ore from their mine near Moanda in the Gabon Republic. Comilog used the line for the total manganese production of their mine which was approximately 3Mtpa. Comilog ceased using the line in 1991 and it Equatorial Resources Limited ABN Level 9, BGC Centre, 28 The Esplanade, Perth, WA, Australia 6000 Phone: Fax:

2 consequently has significant unused capacity. Currently, the only regular service on the line is a weekly passenger train operated by CFCO. Various recent studies have indicated that the line is capable of carrying 11Mtpa of bulk commodities. The Memorandum of Understanding between the CFCO and Equatorial contains the following key terms: With immediate effect, CFCO grants Equatorial access to use the Mayoko to Pointe-Noire railway line. The rental charges for the use of CFCO locomotives, carraiges, and equipment, will be arranged as and when required. CFCO and Equatorial have undertaken to work together to complete operational and investment study ( Study ) for the use of the railway to transport iron ore from Mayoko to Pointe-Noire. Equatorial will immediately commence the Study to evaluate the existing railway. CFCO and Equatorial agree that the Study will be completed on the basis that: o Equatorial will use the railway line on the same basis as other users; o Equatorial will be responsible for all the operations on the line, including maintaining the current passenger service; o Equatorial will maintain the railway line and will be responsible for the purchase and maintenance of all required rolling stock; and o Any additional capacity will be available for the use of other companies on normal commercial terms. A detailed User Agreement will be signed between CFCO and Equatorial for the use of the railway line from Makoyo to Pointe-Noire for the transport of iron ore. The term of this User Agreement will be for 25 years. Figure 1: The Mayoko to Pointe-Noire Railway line 2

3 PROTOCOLE D ACCORD SIGNING CEREMONY The Agreement between Equatorial and CFCO, in the form of a Protocole D Accord or Memorandum of Understanding, was formally executed at a signing ceremony at the CFCO building in Pointe-Noire on the Avenue Charles de Gaulle. The Agreement was signed on behalf of Congo Mining Ltd, Equatorial s 100%-owned subsidiary, by Managing Director and CEO, John Welborn. Mr Welborn commented that The signing of this agreement with CFCO is a very significant milestone for Equatorial and we are delighted that the CFCO is partnering with us as we advance the Mayoko-Moussondji Iron Ore Project CFCO was represented by their entire management team and the agreement was signed by the Directeur General, Monsieur Joseph Saveur El Bez. Mr El Bez commented Equatorial s ambitions and intentions are clear and we can only benefit from their use of the railway line and the development of their project. We are extremely eager to work with them. Figures 2-3: Photographs of Equatorial s Managing Director & CEO John Welborn at the Protocole D Accord signing ceremony with CFCO INFORMATION ABOUT THE MAYOKO - POINTE-NOIRE RAIL LINE The Mayoko to Pointe-Noire railway line is owned by Le Chemin de Fer Congo-Ocean ( CFCO ) a state owned and operated railway company which is administered by The Ministry of Transport for the Republic of Congo. The railway connects Mayoko to Pointe-Noire and was completed by Comilog in the 1970 s. Comilog used the railway to transport and ship manganese, producing and railing as much as 3.1Mt per annum. Bulk haulage ended in 1991 and since then the only regular use of the railway has been a passenger service operated by CFCO. Comilog operated 46 tonne capacity ore cars with a rolling stock fleet of three locomotives and 180 cars. Recent evaluations indicate that with additional locomotives and ore cars the railway line is capable of carrying 11Mtpa of iron ore. Distance by rail line from Mayoko to Pointe-Noire is 439km which consists of 237km from Mayoko to the junction point of the main Pointe-Noire to Brazzaville line and then 202km to the Port of Pointe-Noire. 3

4 The CFCO rail system is narrow gauge of 1067mm (3 6 ) as used extensively in Australia, South Africa, India, and Japan. There are 18 sidings/stations along the line and these and the diesel storage facilities at Mossendjo are currently operational and suitable for bulk haulage. A general downhill grade exists between the Mayoko-Moussondji iron project and the port of Pointe Noire, which is advantageous for loaded trains. Figures 4-5: Photographs of the Mayoko Pointe-Noire railway line taken by Company employees during August 2010 RAILWAY ASSESSMENT AND STUDY Equatorial has commenced discussions with a number of internationally recognised project management and engineering companies in relation to updating recently completed assessments of the railway line and commissioning the completion of the Study contemplated by the agreement between Equatorial and CFCO. The Study will provide the information required to negotiate and complete the detailed User Agreement which the parties have agreed to enter into. Further details will be announced when an appointment has been made. John Welborn Managing Director & CEO For further information contact: John Welborn Managing Director & CEO Equatorial Resources Limited Level 9, BGC Centre 28 The Esplanade PERTH WA 6000 Telephone: Facsimile:

5 ABOUT EQUATORIAL Equatorial is focused on the exploration and development of two potentially large-scale iron projects in the emerging global iron ore province of Central West Africa. Located in the politically stable and investment friendly Republic of Congo ( ROC ), Equatorial s 100% owned Mayoko- Moussondji iron project and Badondo iron project are both highly prospective with significant scale potential. Equatorial is listed on the Australian Securities Exchange (ASX:EQX) and has its head office in Perth, Australia and an office in Pointe-Noire, ROC. Mayoko-Moussondji Project The Mayoko-Moussondji project is located in the south-west region of the ROC immediately to the west of Cape Lambert s Mayoko-Lekoumou iron project. Magnetic and radiometric data from an airborne geophysical survey conducted over the entire project has identified magnetic anomalies with a combined strike length in excess of 46km with potential for significant iron mineralisation. The project has ideal access to infrastructure with a fully operational railway line passing directly through the Mayoko-Moussondji property. This railway was originally designed and operated by Comilog for the heavy haulage of manganese ore and it connects the Mayoko-Moussondji iron project directly to the existing deep-water port facilities at Pointe-Noire thereby providing an ideal transport and shipping solution for future iron ore production. 5

6 Badondo Iron Project ( Badondo ) Badondo is located within a regional cluster of large-scale iron ore exploration projects in the north-west region of the ROC including: Avima (Core Mining/Severstal): 50km north of Badondo Belinga (CMEC): 50km south of Badondo Nabeba (Sundance Resources): 80km north-east of Badondo Mbalam (Sundance Resources): 100km north-east of Badondo Work carried out by BRGM in 2007 confirmed a ridge line of more than 7km long of outcropping iron ore mineralisation and identified the possibility of a second layer of iron ore, parallel to the main ridge. Mt. Badondo and the other iron rich ridges of the Haut Ivindo terrain are relics of ancient metamorphic rocks hosted in the granitic massif of Haut Ivindo. These metamorphic rocks are composed of hematitic quartzite, amphibole and biotite, amphibolites, mica-schists and biotite gneiss with biotite or biotiteamphibole. For all enquiries please contact: John Welborn Managing Director & CEO Level 9 BGC Centre, 28 The Esplanade, Perth, WA 6000, Australia T: \ F: \ W: \ ASX: EQX 6