Charter Pacific Corporation (ASX:CHF) is a Queensland-based investment company with potential to emulate previous ASX-listed Sphere Minerals in Mauritania, which was acquired by Xstrata in a $514 million takeover offer.
While early days at the Kaoua El Khadra Prospect, there are similarities with Sphere's Lebtheinia iron ore deposit, currently being developed by GlencoreXstrata in Mauritania.
Adding spice, Jindal Steel and Power Limited has acquired an adjacent Permit to Charter Pacific's Kaoua and is conducting its own exploration program.
With an iron ore Exploration Target of 2.6-4.4 billion tonnes at Kaoua El Khadra Permit, there is no shortage of iron ore on its tenements.
Early-stage iron ore exploration has revealed high grade results that show potential for a marketable concentrate to be produced at relatively low cost. Therein holds the key to the decision by GlencoreXstrata to develop their Mauritanian iron ore deposits and the allure of Charter Pacific's Kaoua permit.
There are geological similarities between GlencoreXstrata / Sphere's Mauritania Lebtheinia iron ore deposit and Charter Pacific's Kaoua prospect surface expression, in that the project areas are largely flat. This would ease the development of necessary infrastructure.
Research has shown that production costs in Mauritania using a dry sinter process are approximately $32 per tonne (GlencoreXstrata), which are lower operating costs than Pilbara FOB iron ore. The sinter feed route favoured by other iron ore developers in West Africa (dry grinding as compared to wet grinding and pelletisation) has the advantage of lower pre-production capital expenditure.
Interest in Charter Pacific's iron ore prospect has quickened with recent results, including interest from Chinese, Indian and European investors and end users. The target market for product is Europe, where France and Italy are already well established importers of iron ore from Mauritania.
Mauritania already hosts one large iron ore producer, the Societe' Nationale Industielle et Miniere' (SNIM), which produces 12 million tonnes of iron ore per year at Zoueratte, north-northeast of Charter Pacific's Kaoua prospect.
Next step in the exploration process is a drilling program to further test both the quality of the BIFs and their orientation and dip, to establish a maiden resource.
We believe that discussions are underway for new capital.
For a company with a minimum exploration target of 2.6 billion tonnes of iron ore, in a country with an established iron ore industry, Charter Pacific Corporation appears to be worth considerably more than the <$6m currently ascribed to it by the market.
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