ASX-listed West African bauxite hopeful, Lindian Resources has moved to separate the infrastructure interests and mining ownership structures in relation to its Lelouma, Gaoual and Woula bauxite projects in Guinea as it looks to firm up a business model for the development and operation of the assets. As part of the grand plan, the company is hoping to strike binding agreements with various parties to participate in the infrastructure development required to get the projects off the ground.
The Perth-based company says its long-term vision is to help create multi-user infrastructure in the “northern corridor”, which it describes as one of the last undeveloped regions of Guinea that is rich with bauxite deposits.
Lindian recently entered into a Memorandum of Understanding, or “MOU” with the Guinean Government via its 75 per cent-owned subsidiary, Terminal Logistics.
The MOU provides a framework to explore the possibility of jointly developing a new deep-water port at the Port of Dobali and associated infrastructure corridor logistics to facilitate bauxite shipments.
Importantly, the company says the MOU allows it to progress feasibility studies on an upgrade to the port.
Whilst the infrastructure and mining ownership structures may ultimately be separated, at this stage Lindian is not stepping away from involvement in the infrastructure. Part of its appraisal of the Port of Dobali project will also weigh up the merits of the company taking an equity interest in the infrastructure solution that may present a revenue stream under a third-party access operating model.
The execution of this MOU enables Lindian to drive a longer-term infrastructure solution to unlock the value associated with a large-scale development of our bauxite projects. Bauxite mining is largely an infrastructure and logistics business and to that end, we are positioning Lindian for long-term success in Guinea.
According to the company, possible key benefits of the proposed separation of the infrastructure and mining corporate structures include allowing non-mining investors to participate in the infrastructure development, thereby improving the prospects of raising the required development CAPEX.
The northern corridor of Guinea remains largely undeveloped primarily due to a lack of infrastructure, which the company attributes to the non-integration of infrastructure between different mining companies into a single optimised and multi-user infrastructure corridor.
Lindian says it believes “mutualisation” of infrastructure in the northern corridor has the potential to reduce the capital cost per tonne of capacity and reduce the operating costs through economies of scale, making projects more profitable and more attractive to investors.
The company has also entered into an MOU with Chinese construction company, China Railway Seventh Group, who Lindian says is expected to visit all three of its bauxite projects in the current quarter.
China Railway Seventh Group will also run its eye over Lindian’s proposed associated infrastructure solutions, including the Port of Dobali location.
In the short term, however, the company is continuing to evaluate a potential low CAPEX development and early pathway to bauxite production at the smaller Woula project, which encompasses construction of a 10-kilometre haul road from the proposed mine to link to existing infrastructure.
Further down the track Lindian hopes to develop the larger Gaoual high-grade conglomerate bauxite project that could incorporate the key element of building a 100km haul road to connect to existing infrastructure.
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