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Baobab Resources is rapidly advancing Tete project towards feasibility

Baobab Resources (AIM: BAO) said it continued to strengthen its foothold as a prominent exploration company in Mozambique during the first half, being focused on the Tete iron-vanadium-titanium project. Tete has been confirmed as a high potential project and Baobab plans to rapidly advance its development during the coming year, with feasibility studies targeted within 12-18 months.

On London’s AIM market, Baobab’s shares were up 7.8 percent in midday trade.

In September 2009, Baobab completed of the project’s maiden JORC Inferred Resource of 47.7Mt, covering a 500m portion of the 8km long Massamba Group trend. The company also estimated a 400 - 700Mt Exploration Target for the greater Massamba Group area of the project.

The Tete project contains two areas of magnetite-ilmenite mineralisation, with the Singore area to the south and the Massamba Group trend in the north. The company’s activities in 2009 were focused on the Massamba Group area. The 8km long Massamba Group is composed of five prospects including Chitongue Grande and Pequeno, Caangua, Chimbala and South Zone.

On its outlook for the period ahead, Baobab said the next cycle of exploration activities will include a 12,000m diamond and reverse circulation (RC) scout drilling programme on the Chimbala and South Zone prospects to improve confidence. Furthermore, the company plans to follow up ‘Priority 1’ areas with step-out resource drilling, targeting 300Mt of possible resources. In the Singoe area, the preliminary assessment of high priority aeromagnetic targets is also planned.

Metallurgical test work and market studies will continue to determine optimal process flow. Scoping studies are ongoing and the company plans to begin preliminary negotiations with government departments, suppliers, end users and key stake holders.

Baobab stated that 2010 will be an exciting year, as it is fully funded to complete planned scout drilling and metallurgical campaigns. The current market sentiment and longer term iron ore and related metals forecasts are positive, making the bulk commodity space an exciting arena in which to be working, Baobab said.

Diamond drilling began on the Chitongue Grande prospect in April 2009, with 15 holes completed totalling 3,092m along a strike length of approximately 500m.  Subsequently, Baobab commissioned independent consultants, Coffey Mining, to complete a resource estimate based on the completed drilling programme. In September, the company announced the maiden JORC resource estimate, of 47.7 million tonnes inferred mineral resource with an average concentrate of 63.7 percent iron.

At the South Zone, Baobab said that detailed mapping during November 2009 further resolved the geological parameters of the prospect and the mineralisation is similar to that observed in the Chitongue Grande drill core.

While the Massamba Group remains the focus of the 2010 drilling campaign, Baobab's technical team will be rapidly developing the knowledge base at Singore with the view to targeting scout drill holes as soon as practicable. In November and December 2009, the company also began reconnaissance field investigations of the Singore East area. According to Baobab, the reconnaissance work at Singore East is particularly encouraging as it has opened up highly prospective, virgin exploration ground close to the area of core activity.

Baobab carried out two separate fund raisings in the period, during August and November, raising a total of £3.28m. For the six months ended 31 December 2009, the company reported a loss of £786,985, compared with £848,572 in the comparative period of 2008.

Disclosure: The author holds no positions in the company