Baobab Resources (AIM: BAO) announced that the International Finance Corporation (IFC), its joint venture partner for the Tete iron/vanadium/titanium project in Mozambique, has committed a pro rata contribution of US$700,000 for the project’s 2010 exploration programme.
"We are very pleased to announce the continued support of our partner IFC as we build up 2010 work programmes at Tete”, Baobab chairman Jeremy Dowler commented. “Looking ahead, we anticipate IFC becoming more involved as the project develops, particularly in the facilitation of access to infrastructure, namely port, rail and power”.
The IFC participated in a placing to become Baobab’s second largest single shareholder with 6.92% in November 2008. Later in January 2009, the IFC acquired a 15% stake in the company’s Tete magnetite-ilmenite project for US$400,000.
Under the terms of the join venture, the IFC committed to annual pro-rata contributions to the development of the Tete Project. As the operator and major stakeholder in the project, Baobab is required to fund the remaining portion of the exploration expenditures.
"IFC's second investment in the Tete joint venture demonstrates our continued support for a project with good fundamentals and a strong management team”, IFC Global Head for Mining William Bulmer stated.
The IFC is a member of the World Bank Group, and according to the IFC, it fosters sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services. Furthermore, Baobab noted that the World Bank and the IFC have a long and respected history of promoting sustainable mining in developing countries and IFC is highly regarded as a long-term partner in mining development projects.
Last month, Baobab said that Tete has been confirmed as a high potential project and it plans to rapidly advance its development during the coming year, with feasibility studies targeted within 12-18 months.
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 8km long Massamba Group is composed of five prospects including Chitongue Grande and Pequeno, Caangua, Chimbala and South Zone.
Baobab’s next cycle of exploration activities is expected to include a 12,000m diamond and reverse circulation (RC) scout drilling programme on the Chimbala and South Zone prospects to improve confidence. Also 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.
Astaire Securities featured Baobab in its Morning Report today, saying the IFC are a very useful partner to Baobab, both politically and financially. "Moreover, today’s comments by William Bulmer should provide investors with increased confidence in both the fundamentals of the iron ore project, and the quality of Baobab’s management team," the broker added.
Disclosure: The author holds no positions in the company