Cameroon Mining Report Q2 2016

Cameroon Mining Report Q2 2016

BMI View: Cameroon's iron ore production growth will ramp up on the back of the country's high gradereserves, strong government support and solid infrastructure investment over the coming years.

Latest Developments & Structural Trends

We expect Cameroon to play an increasingly important role in African iron ore production over the nextfew years as the Central African country begins to develop its abundant mineral reserves following aseries of recent discoveries. Despite this, Cameroon will remain in the shadow of more prominent Africanproducers, such as Sierra Leone and Guinea. However, it is set to experience a significant increase in itsiron ore output as a number of new projects come online. At present, Africa produces 2% of global ironore output, but is estimated to hold 20% of global reserves. In view of the series of new projects andexpansion plans scheduled to come online over the coming years, we expect the continent to be a keyregion for growth in iron ore production. Our bullish outlook for the iron ore sector chimes with growinglevels of foreign direct investment as well as renewed efforts by African governments to improveinfrastructure and remove logistical constraints.

In May 2015, Australia-based Sundance Resources raised the hematite ore reserve for the first phase ofits Mbalam-Nabeba project, in Cameroon and Congo-Brazzaville, by 18.5% to around 517mn tonnes.

The deposit has a grading 62.2% iron. The increase to the ore reserve was caused by the optimisation ofthe high-grade ore reserve process during pit design and mine scheduling phases. The increase in reservehas also been attributed to the mining and processing of lower-grade ores from the beginning ofoperations. Additional indicated hematite resources were also estimated for the Mbalam and Nabebadeposits, which also led to the reserve increase. The hematite mineral resource at Mbalam-Nabeba saw a4% rise to 805.7mn tonnes, grading 57.3% iron. Sundance also increased the nameplate productioncapacity of the Mbalam mine, which is on the Cameroon side of the border, from 35mn tonnes per year(mntpa) to 40mntpa. Phase one of the project is expected to begin before end-2015.