The Cortellazzi Consortium

February 24, 2008

Something Old, Something Borrowed…

Filed under: Uncategorized — 18montecristo67 @ 1:26 am

Since the He-5 Resources website is “under construction” in order to make way for some modifications, the Blog has considered this would be an appropriate time to fill the information gap and share information which it has uncovered concerning the latest He-5 Resources project in Côte d’Ivoire which was announced in their 31 Jan 2008 and 6 Feb 2008 press releases.

According to the He-5 press releases, the “multi-billion dollar iron ore mining” project is located in the Mount Klahoyo area . On 31 Jan 2008, He-5 Resources claimed ” The final documentation for the iron ore concession called a binding Agreement is currently being negotiated.” and We have set a goal to accomplish complete international legalization of the concession Agreement by April 15, at which time the final signed documents will be posted on the corporate website.”

However on 6 Feb 2008, the closing date had moved up and He-5 claimed “the binding Agreement, which would legally award the iron ore concession to HE-5, will be signed any day now. ”

The project is described in the 31 Jan 2008 press release as follows:

“As per the Preliminary Agreement, HE-5 will generate substantial revenues from the export of iron ore extracted from the Properties for a period of at least 15 years. HE-5 will be authorized by the Government to exclusively perform the following tasks: mine exploration, development and production; in-country infrastructure; international financing; and iron ore sales to international steelmakers (hereinafter referred to as the “Project”).”

Interestingly, this won’t be the first time which this particular “in-country infrastructure” has been proposed.

In fact, a previous railway project linked to Mount Klahoyo’s Iron Ore is a oft recycled project in Côte d’Ivoire.

The Railroad Association of South Africa reports it was proposed in 1976, scheduled for completion in 1980 and was never completed :

“After the recent discovery of huge iron-ore deposits estimated at one thousand million tons in the Man region, in the Western part of the Ivory Coast, a choice had to be made between building a pipeline or a railway to work the mines. It was finally decided to adopt the second alternative, since it also could be used for carrying other products besides iron-ore, of which twelve million tons will be moved to the port of San Pedro annually.

The new line, some 365-km in length will start from Mount Klahoyo, 25-km to the east of Man, pass through Duékoué, Guessabo, Yabayo and Soubré, and terminated at San Pedro. There will be branch feeder lines towards Daloa via Issia and Man. Long welded rails will be used for the main line.

The lines is due to open in 1980 and it is expected that, in addition to the twelve million tons of ore, 1.2-million tons of products intended for working the mine, and 857 000 tons of rough and treated timber, coffee, cocoa, sugar, hydrocarbons, etc. will be carried annually. The number of passengers should be in the region of 338 000.
(Complete article)

This Transport World column
SA Transport, October 1976

Postscript: This railway has never been built, although further studies have been made over the years, linking the project to Nickel deposits in the region.”

The same railway/Mount Klahoyo Iron Ore project was revived by a Canadian company in 2000 and abandoned in 2006.

A 1999 USGS report mentions the project and the Canadian company :

“Iron ore deposits in Côte d’Ivoire were at Monogaga, which is near Sassandra between San-Pédro and Dabou, and Mount Gao, Mount Klahoyo, Mount Nimba, Mount Segaye, Mount Tia, and Mount Tortro. The country’s total iron ore resource was estimated to be 3,000 million metric tons (Mt) (MBendi information Services (Pty.) Ltd., July 12, 2000, Côte d’Ivoire—Iron ore mining, accessed February 19, 2001, at URL http://www.mbendi.co.za/indy/ming/iron/af/ci/p0005.htm).

In December 1999, Melkior Resources Inc. of Canada signed a letter of agreement with SODEMI to earn a 50% interest in the Mount Klahoyo iron deposit; SODEMI would retain 50% equity interest in the prospect. In a 1976 feasibility study, Mount Klahoyo’s iron ore reserves were estimated to be 670 Mt of iron content. The study proposed that the Mount Klahoyo magnetite, a 32.7% iron ore, could be beneficiated to a concentrate grading 70% iron with 2% silica (Melkior Resources Inc., December 16, 1999, Melkior lands a major iron project in Ivory Coast, Press Release, accessed December 17, 1999, at URL http://biz.yahoo.com/ccn/991216/m.html).”

This is the press release to which the 1999 USGS report refers:

“NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: MELKIOR RESOURCES INC.
ME SYMBOL: MKR
DECEMBER 16, 1999

Melkior Lands a Major Iron Project in Ivory Coast

NEPEAN, ONTARIO–Melkior Resources Inc. has signed a Letter of Intent with La Societe pour le Developpement Minier de la Cote d’Ivoire (SODEMI), to undertake an updating of a feasibility completed in 1976 by Pickands Mather & Company International on the Mount Klahoyo Iron deposit on which US$17,840,000 have been spent.

The 1976 feasability study has reported a reserve of 670 million tonnes of 33 % iron in the form of magnetite, sufficient to produce 300 million tonnes of pellets. The study indicates that the material has a very high purity and can be upgraded to 70 % iron.

The Government of Ivory Coast will initiate a railway prefeasibility to update a railway study originally undertaken in 1976 by a Belgian group which is interested in participating in updating the study. The 350 km railway would also serve a nickel deposit presently being evaluated by Falconbridge.

Melkior has retained the services of Mr. Robert Martin, formerly executive Vice-President of the Iron Ore Company of Canada as the company’s consultant and co-ordinator for the project. Melkior has received a proposal from Met-Chem of Montreal to update the 1976 feasibility to a current prefeasibility level to be followed by a full feasibility depending on economics.

Melkior will earn an interest of 15 % by completing a refeasibility study costing up to US$250,000 and issuing S$100,000 of its shares to SODEMI upon completion. Melkior’s interest will increase to 50 % by completing a bankable feasibility costing up to US$10 million and issuing US$2,000,000 in shares. SODEMI will hold the remaining 50 %. The importance of good economics for this project is recognised by all parties, hence the agreement anticipates proceedings beyond prefaisability stage if an Internal Rate of Return (IRR) of 25 % can be emonstrated.

The Government of Ivory Coast considers the development of Mount Klahoyo iron deposit and the nearby nickel deposits to be of high national priority. To signify this importance the Cabinet of Ivory Coast provided prior approval of the Letter of Intent. The contents of the Letter of Intent shall be submitted to regulatory authorities for approval.

Melkior’s President, Jens E. Hansen, P.Eng., has 25 years of experience on projects in West Africa including Ivory Coast”

Three years later, the required pre-feasibility study had not been completed:

2003 Annual report

(f) Côte d’Ivoire

The Company holds an option to acquire a 15% interest in a property located on the Mont Kilahoyo by financing a pre-feasibility study costing up to US $250,000. The Company can increase its interest to 50% by financing the cost of a feasibility study costing up to US $10,000,000 and issuing shares valued to US $2,000,000.

During the year, the Company wrote down the carrying value of this property by an amount of $148,203.

By 2005, Côte d’Ivoire was deeply embroiled in a civil war and Melkior was forced to shelve the project and let their option expire since the area was being held by rebel forces.

2005 Annual Report

Ivory Coast

The Company holds an option to acquire a 15% interest in a property located on the Mont Kilahoyo by financing a pre-feasibility study costing up to US $250,000. The Company can increase its interest to 50% by financing the cost of a feasibility study costing up to US $10,000,000 and issuing shares valued to US $2,000,000. The area of Mont Kilahoyo is presently held by rebels unfriendly to the Central government. Melkior has no plans at this stage to pursue work in Ivory Coast. The Company intends to let this option expire.

On 13 December 2006, Melkior issued a press release indicating that it was officially abandoning the project;

Melkior announces that the Board of directors has decided to dispose of any assets it may have in Ivory Coast as well as in the Democratic Republic of Congo (the “DRC”) in favor of 157337 Canada Inc. a 100% company owned by Mr. Jens E. Hansen, president of Melkior. This transfer of assets is for $1.00 and other valuable consideration namely the assumption by 157337 Canada Inc. of any amounts due by the Melkior in connection with its dealing in Ivory Coast as well as in the DRC. Melkior had already stated that these assets were not viewed as strategic and that it did not wish to extend any further resources towards their development.

Xstrata, a significant mining company which absorbed Falconbridge and prominently mentioned in the recent 6 Feb 2008 He-5 Resources press release , has declared recently that it was considering restarting it’s Ivory Coast nickel project at Touba-Biankouma, however it has yet to mention that it will.

28 May 2007
Xstrata mulls Ivory Coast nickel project restart

Xstrata PLC (XTA.LN) is considering the resumption of Falconbridge’s nickel project in northwestern Ivory Coast, the project’s geologist said.

A delegation (of Xstrata) is coming next month to assess the social-political situation and security,” Raoul Yao Kouame said.

The Touba-Biankouma project is located 650 kilometers (404 miles) northwest of Abidjan, in an area held by rebels since a 2002 civil war.

Falconbridge was taken over by Swiss-based, London-listed Xstrata last year.

Falconbridge started exploring and drilling for nickel in the hills between Touba and Biankouma in 1995 and reported a vast laterite deposit of 292 million metric tons of nickel ore at 1.46% nickel per ton.

The concession is the property of the state-owned Societe pour le Developpement Minier, or SODEMI.

Xstrata is operator and holds 85% of shares in the project, with SODEMI holding the rest.

In September 2002 work at the site was stopped when rebels seized the area and most of Ivory Coast northern half after failed coup against President Laurent Gbagbo.

After a 2002-03 civil war, a series of peace agreements was signed but tension remained and led to several violent crises until March, when a peace agreement was signed which included the appointment of rebel leader Guillaume Soro as Prime Minister.

Soro and his government of national unity have taken the first steps towards the country’s reunification and the return of government officials and security forces to the rebel-held north.

Expectations in Biankouma and the mining area, visited by Dow Jones Newswires last week, are high but residents said the lack of security remains a problem until Ivorian police and paramilitary gendarmerie have returned.

They said armed gangs, known locally as ‘coupeurs de route’, or highway robbers, are active in the area.

Most equipment at Falconbridge’s office in Gouessesso, near Biankouma, has been looted but the building is still largely intact and ore samples stockpiled at a warehouse and inside two containers are still there.

Xstrata does not list Côte d’Ivoire as one of the 18 countries in which it has major operations/projects : Australia, Argentina, Brazil, Canada, Chile, Colombia, the Dominican Republic, Germany, Jamaica, New Caledonia, Norway, Papua New Guinea, Peru, South Africa, Spain, Tanzania, the United States and the United Kingdom.

Touba-Biankouma does not even receive a mention in Xstrata’s 2007 annual report.

It should come as no surprise that Xstrata hasn’t rushed to restart the project since the current situation in Côte d’Ivoire is best described as fragile as these recent news reports will attest:

Côte d’Ivoire: American Embassy’s National Daily Press Review

United States Embassy (Abidjan)

29 January 2008
Posted to the web 29 January 2008

2. Soir Info (a privately-owned daily): In a front-page story, the former Ivorian President Henri Konan Bedie reportedly said that it would be possible to organize elections in Cote d’Ivoire without a total disarmament. The paper further quoted Bedie as saying: “We should recognize that there are many stumbling blocks on the way to peace. It is for that reason that we want to give priority to anything that concerns the election, because we think that this election will be one of the essential factors that could lead to peace.”

3. In a related development, Soir Info carried a feature story explaining how the New Forces are “blocking” the peace process. The paper noted that the disarmament of combatants of the former rebel group and the redeployment of public services in the former rebel territories are yet to be completed. The paper asserted that the New Forces are just playing “delaying tactics.” The paper concluded that “the delay on the part of the New Forces to implement the Ouagadougou Political Agreement is in total contradiction with the apparent enthusiasm being demonstrated by the political and the military leadership of the movement.”

CPJ urges Cote d’Ivoire to lift RFI suspension

Lagos – 06/02/2008 – Panapress

Political tensions remain high in the cocoa-rich country over the difficult implementation of a March 2007 peace deal slated to usher a democratic transition and reunite a rebel-held north and a government-controlled south.

Relations between Cote d’Ivoire, a former French colony, and France remain tense, notably over the unsolved disappearance of Franco-Canadian journalist Guy-André Kieffer.

Cote d’Ivoire: Two UN peacekeepers killed in ICoast road smash: UN

ABIDJAN, Feb 11, 2008 (AFP) – Two police officers from the United Nations peacekeeping force in Ivory Coast have been killed in a road accident, the United Nations said on Monday.

Insa Ndiaye from Senegal and Fatimata Moussa from Niger died on Friday south of Korhogo — the main town in the rebel-held north — while en route to the central city of Bouake.

The accident takes to seven the number of UN police killed in Ivory Coast since the 8,000-strong peacekeeping force — backed by 3,000-3,500 French troops — was deployed in 2004 after an attempted coup split the country in two.

A March 2007 peace deal signed in Ouagadougou, Burkina Faso, formally ended five years of conflict in cocoa-rich Ivory Coast, a former beacon of stability and prosperity in West Africa.

UN chief Ban Ki-moon said in a January 9 report that the peacekeeping mission should be maintained at current strength for another year and should be maintained until further progress is made towards lasting peace.

In November President Laurent Gbagbo and Prime Minister Guillaume Soro — the former rebel leader — signed a deal to hold elections in late June 2008 at the latest.

The current He-5 Resources “project” for Côte d’Ivoire bears more than a passing resemblance with a past proposed and abandonned project by Melkior Resources (and it’s predecessor Consolidated Trillion Resources) in Côte d’Ivoire.

Something Old, Something Borrowed…

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