Bellzone Mining

Guinea-focused iron ore counter Bellzone Mining (BZM) is contemplating a move from AIM to the Full List as it prepares for first production next year. The Western Australia-based company, which cites a maiden resource of 111m tonnes with 38% iron ore at its key Kalia project, suggests that another project, Forecariah, could produce its first output in the first quarter of 2012.

Forecariah is a 50-50 joint venture between Bellzone and Hong Kong-based China International Fund (CIF), which is funding Kalia and an attendant crucial infrastructure project. The company expects Forecariah to produce between 4m and 10m tonnes a year at a capital cost of between $208m (£130m) and $346m and envisages production costs of around a third of market prices.

Cash flow from Forecariah will help towards the funding of Kalia, where Bellzone has established a formal resource estimate of 670m tonnes of magnetite ore measured and indicated, with 3.07bn tonnes inferred, beneath the initial 111m tonnes of oxide material. With a funding facility from CIF, Bellzone hopes to complete a definitive feasibility study on Kalia in the fourth quarter of this year and envisages taking the project, whose overall capital costs are put at $1.7bn, into initial production in 2014.

Seasoned Australian mining entrepreneur Nik Zuks, Bellzone’s managing director and controlling shareholder, secured the Kalia project for the company through top-level contacts at Guinea’s Ministry of Mines. Directors are talking about a projected margin of $19.7 a tonne for Kalia output.

Growth Company Investor highlighted Bellzone’s shares at last year’s 35p float price and again at 53.25p, before suggesting partial profit taking at 82p. They now trade at 59.5p and, though clearly not without risk, could make significant progress over the medium term, as long as Chinese demand for iron ore remains strong.

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