Update: Sable Mining Is Still Intending To Move Nimba Ahead

| About: Consolidated Growth (SBGGF)
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Summary

Sable Mining releases an update on its Nimba project which it still aims to develop.

That’s a nice surprise as I thought the current iron ore price would make the project virtually worthless.

The investment thesis is severely impacted by the iron ore price and I hope the BFS will outline some potential cost saving measures.

Sable Mining (OTC:SBGGF) has announced in an update that it's still planning to continue its attempts to bring the Nimba iron ore project into production. This is remarkable as I'm not sure the project would generate any meaningful returns at the current iron ore price. The company's chairman seems to have a different opinion as he states that "I am pleased to advise our investors that Sable Mining remains in a strong position compared to many of its peers, with an exceptional high grade, low capital intensity project primed for swift development" (see previous link).

I'm not sure if Sable's chairman believes his own statement as unfortunately I'm a bit more pessimistic than he is. The main value proposition at Nimba is the premium for its high grade hard lump part of the production. According to the company, comparable projects command a premium of $18/t for these characteristics. If that would be true, the Nimba project would have its merits as the All-in cost (including shipping expenses from Africa to Europe) would likely be less than $60/t. If the premium for the Nimba-type of iron ore would be anything less than $18/t, it'll be difficult to entice potential investors in the property as at the current iron ore price (which has recently tumbled below the $70 mark) it would cause the project to have a payback period of 6-7 years, which is quite long.

Just for the record, I am NOT writing this project off just yet as I do agree that the Nimba project is a very interesting project, but - just like all other projects - it will need a higher iron ore price in order to be developed. A bankable feasibility study is expected in 2015 and I hope the company will be able to prove the value of the Nimba project. The jury's out on this one, and that's not Sable's fault, but caused by the current state of the general iron ore market.

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