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Cameroon Cobalt - Nkamouna
Geovic Cameroon ("GeoCam") was formed in 1995 to explore a prospective area in Cameroon identified by a UN Development Program. GeoCam subsequently acquired exclusive rights to develop its cobalt-nickel-manganese deposits through a Mining Convention issued in 2002. A Mining Permit was decreed in favor of GeoCam in 2003 that covers the entire cobalt mineral province in southeastern Cameroon, perhaps the largest primary cobalt resource in the world. Geovic Mining Corp. (GMC) owns 60.0% of Geovic Cameroon and manages project operations. The National Investment Corporation of Cameroon, www.sni.cm, controls 39.5% (including 20% directly), and 0.5% is held by GMC President William A. Buckovic.
A January 2008 NI 43-101 compliant Technical Report concluded that the Nkamouna property contained proven and probable ore reserves of 54.7 million tonnes grading 0.25% cobalt, 0.69% nickel, and 1.33% manganese. In 2008, a 2,045-hole, 54,900 meter drilling program yielded a November 2009 NI 43-101 compliant Technical report calculating combined Measured, Indicated, and Inferred Resources at the Nkamouna and neighboring Mada properties of 323 million tonnes grading 0.21% cobalt, 0.61% nickel, and 1.25% manganese. A follow up NI 43-101 report updating proven/probable reserves at Nkamouna and Mada, as well as calculating an initial resource estimate at the adjacent Rapodjombo property, is expected to be published simultaneously with an updated Feasibility study around 4Q 2010.
In September 2008, a Feasibility Optimization Study (FOS) was completed by an alliance of three engineering firms, Bateman International, Roberts & Schaefer, and Group Five Projects, successfully improving upon the project economics calculated in the original Feasibility Study dated December 2007. The FOS results included a base case Net Present Value (NPV) of $1,024 million (or $614 net to Geovic's 60% stake) at an Internal Rate of Return (IRR) of 44%. The FS processing rate of 2,000 tonnes per day (tpd) represented a 33% increase from the earlier prefeasibility study (PFS) processing rate of 1,500 tpd. Per the FOS, Geovic Cameroon plans to produce approximately 4,100 tonnes per year (tpy) cobalt and 3,200 tpy nickel from 656,000 tpy of physically upgraded concentrates for an initial period of 19 years. High-grade cobalt and nickel oxides will be produced mainly to supply the fast-growing demand for hybrid electric vehicle batteries. Nkamouna and the adjacent Mada property represent the first two of seven such properties to be developed.
In 2009, Geovic Cameroon completed the aforementioned drilling program, as well as numerous process tests aimed at simplifying the project and lowering its costs, thus improving its prospects for financing. With those programs substantially completed in late 2009, the Company announced in December 2009 that a Feasibility Study Update (FSU) would be commencing in January 2010. Lycopodium Minerals Pty. Ltd. of Perth, Australia was appointed to complete this study, which is currently anticipated to occur in late 2010. At that point, Geovic Cameroon aims to immediately move to the financing and plant construction stages of the Project.
To that end, in December 2009 Geovic engaged the U.K.-based Standard Chartered Bank as Financial Advisor to help it secure such financing, either in the form of a traditional debt/equity Project financing or via alternatives methods such as strategic partnerships or joint ventures.
When the project commences, mining will be relatively inexpensive as the deposits average less than 16 meters deep and blasting is not required. The Nkamouna ore-body is large, predictable, and open for further expansion. Since these specific ores are amenable to simple pre-concentration and leaching at atmospheric pressure with a low acid consumption, project capital costs may well be the lowest in the industry, and operating costs will be highly competitive with global cobalt producers.
In May 2007, Geovic Cameroon received a Certificate of Compliance for the environmental and social assessment. Moreover, a water permit was received in January 2008. Upon receiving a land lease that compensates the government for disturbed lands, Geovic Cameroon will have all permits necessary to construct and operate the Nkamouna Project.
The Republic of Cameroon has a history of political and economic stability, and continues to pro-actively institute economic reforms and governmental improvements through privatization and diversification. The Government strongly encourages foreign investment, including development of its natural resources, and has designated Geovic Cameroon as a Strategic Enterprise thereby qualifying the company for 50% reductions in taxes and various operating incentives. It is also involved in numerous international strategic initiatives aimed at improving transparancy of the nation's financial and operating procedures, such as the recently created EITI program, or Extractive Industries Transparency Initiative.
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