West African iron ore review / Обзор железорудных месторождений Западной Африки

West Africa is emerging as a new region of potential iron ore producers as large scale projects are being pursued by the majors and junior projects come on stream. 

Juniors have been able to enter this market despite infrastructure challenges with capital coming from external parties mainly the Chinese attracted by the large scale infrastructure opportunity. 

We prefer juniors that are pursuing smaller deposits with higher DSO potential with a lower capital outlay. As iron ore prices remain in balance against a weaker demand outlook and concerns remain on a Chinese soft landing, there will be greater scrutiny on the quality of the resource and projects. 

A large magnetite resource without the benefits of a sufficient oxide cap can be challenging and needs agreater capital commitment. 

The political history of West Africa has not been for the faint hearted but there appear to be more sensible emerging regimes in the Congo, Cameroon and Liberiawhich help in bringing down country risk and discount rates. 

Lessons can be learnt from the listed juniors in terms of capex projections which have risen considerably from initial projections. 

Despite all this, high margins based on lower operating costs offer attractive returns on these projects once capital is secured. <...>