2012 Highlights; A Message from the Managing Director
Perth, Oct 25, 2012 AEST (ABN Newswire) - A Message from the Managing Director of Equatorial Resources Limited (
ASX:EQX).
Dear Fellow Shareholders,
It gives me great pleasure to report on the progress we have made during the financial year towards our vision of becoming Africa's next major iron company.
In a period of challenging and volatile international markets for iron ore, Equatorial Resources Limited ("Equatorial" or the "Company") continues to successfully advance the exploration and development of our two 100% owned iron projects in Central West Africa. Significant achievements have placed Equatorial in a strong position to be a leader in unlocking the iron ore potential of Africa and to outperform in the region's race to production. As at 30 June 2012, your Company had more than $75 million in cash and an expanded team of dedicated professionals and industry experts focused on advancing our work at the Mayoko-Moussondji Iron Project ("Mayoko- Moussondji") and the Badondo Iron Project ("Badondo") in the Republic of Congo ("ROC"). Equatorial's success is built on a solid commitment to create shareholder value and to reward our stakeholders, shareholders, employees, and the communities in which we operate.
Central and West Africa is rich with massive high quality resources of iron ore. The region has the potential to supply over 30% of the world's seaborne iron ore, but currently this potential remains undeveloped. The recent volatility in global iron ore prices creates an exciting opportunity for the region and particularly for Equatorial. Unexpected commodity price fluctuations have resulted in current producers delaying, and in some cases cancelling, their expansion plans. While exact growth rates of the Chinese economy remain the subject of debate, respected analysts agree that global demand for iron ore will continue to grow. Demand growth, coupled with constrained expansion, escalating capital and operating costs of existing producers, and the deferral of new projects, will increasingly encourage steel makers, investors, and traders to search for alternative supply sources of quality iron ore at a competitive cost. The quality and scale of the iron resources in Africa will drive the development of both sm all and large scale greenfield production. Equatorial has the opportunity to be a major player in the development of this region from iron potential to iron ore production. Equatorial is extremely confident that the evolution of a long term sustainable price environment for seaborne iron ore will result in new projects in Central and West Africa becoming high quality, low cost producers.
Equatorial's advantage is its exposure to both short and long term development opportunities in the emergence of Africa as a significant iron ore producer. Mayoko- Moussondji has near term production potential based on near surface high grade iron mineralisation and its access to existing rail and port infrastructure. The Company's immediate strategy for Mayoko-Moussondji is to use the existing infrastructure to build scalable production capacity with globally competitive capital intensity.
Badondo is located in a region that is emerging as "the new Pilbara" of Africa. The challenge is to establish the transport infrastructure required to enable production from the region to reach international markets. Our initial exploration activity indicates that Badondo has the potential to be one of the most significant assets in the region. Equatorial's strategy is to prove the geological value of the project while exploring the opportunities for cooperation with the ROC government and other mining companies on the development of rail and port facilities. Infrastructure development in the medium to long term will unlock the immense value of the large scale high quality iron reserves of the region.
During the financial year Equatorial recorded a number of important achievements. The highlights include:
- - The renewal of both the Mayoko-Moussondji and Badondo exploration licences granted by the ROC government with 100% retention of the project areas;
- - Acceleration of the drilling program at Mayoko-Moussondji and confirmation of the Company's geological model;
- - The potential for a range of premium iron products to be produced from the mineralisation at Mayoko-Moussondji as demonstrated by the results from the Company's metallurgical testing program;
- - Continued progress on infrastructure feasibility work for Mayoko-Moussondji conducted under agreements with the ROC government owned rail and port agencies;
- - Commencement of the Environmental and Social Impact Assessment study for the future mining operation at Mayoko-Moussondji;
- - Expansion of the Company's regional footprint with the granting of two new prospecting permits for iron in the Mayoko region;
- - Exploration at Badondo identified the potential for a globally significant iron deposit;
- - Regional cooperation agreements signed with other iron projects in northern ROC;
- - The recruitment of highly qualified and experienced key executives and staff to join Equatorial's growing team;
- - Shareholder approval of a Performance Share Rights scheme to assist the recruitment, retention, and reward of the Company's staff and contractors;
- - Advancement of Equatorial's ROC community investment program; and
- - The Company's balance sheet and treasury position was reinforced with significant cash reserves.
Developing and maintaining harmonious relationships with local communities, government and the environment continues to be a fundamental principal of our development strategy in the ROC. Equatorial has established a community investment model designed to provide ongoing benefits to the local communities in which we operate and to link with our training and employment of a growing Congolese workforce. In addition to funding local education programs, providing medical and health services, building local power and water services, Equatorial has forged an alliance with the University of Brazzaville to provide undergraduate training programs for Congolese nationals seeking careers with Equatorial. As we expand our activities we are employing and training increasing numbers of Congolese nationals and remain committed to the highest standards of social responsibility and sustainable development.
The financial year ahead will be an extremely exciting period for Equatorial. At Mayoko-Moussondji we will define a clear pathway to production. This will be built on the release of a maiden JORC compliant mineral resource estimate, definitive results of the Company's metallurgical test work program, an environmental and social impact study, and finalisation of feasibility work on the existing transport infrastructure. Our exploration activity at Badondo will accelerate as we confirm the potential of both our project and the region. Consolidation and cooperation will continue to be a theme in the development of the region. Equatorial expects this regional development to be the result of exploration success and efficient project development initiatives. A strong balance sheet with large cash reserves, fully funded exploration programs, a world-class team of dedicated industry experts, projects with demonstrated advantages, and a clear strategy provides Equatorial with a solid platform to build value.
I am extremely proud of the advances we have made during the financial year and I take this opportunity to personally thank the board, management, and all our employees for their significant contribution and effort during this period of sustained progress and development. I also extend my sincere appreciation to shareholders for your support and I look forward to sharing success with you in the financial year ahead.
Yours faithfully,
JOHN WELBORN
MANAGING DIRECTOR
To View the 2012 Highlights, Maps and Charts, please visit;
http://media.abnnewswire.net/media/en/docs/ASX-EQX-609961.pdf
Contact
Equatorial Resources Limited
T: +61-8-9322-6322
F: +61-8-9322-6558
WWW: www.equatorialresources.com.au
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