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UPDATE - Bushveld Minerals' resource upgrade underlines confidence in iron ore asset

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Bushveld Minerals (LON:BMN) says an upgraded mineral resource on the P-Q deposit on its flagship iron ore project has underlined the group's confidence in the scalability of the asset.

The total inferred and indicated JORC resource at the South African project is now 991 million tonnes (Mt) - that's a 29% increase on the previous figure of 770 Mt.

That includes 52 Mt on the main magnetite layer.

The total resource for the P-Q zone is now 939 Mt, representing a 31% increase from the previous 718 Mt.

The new resource includes the addition of the Schoonoord 786LR and Bellevue 808LR farms to the licence area, which are extensions to the P-Q zone and includes additional drilling from there.

Bushveld chief executive Fortune Mojapelo said: "This resource upgrade reinforces our confidence in the scalability of this asset, while maintaining its low cost mining proposition. 

"Bushveld expects to prove up a mineral resource in excess of 1 billion tonnes by delineation of further open-pittable tonnages to the south along further strike extensions of this mineralisation.

"In addition to proving the scalability of this deposit, Bushveld is simultaneously focussed on the downstream development of the project towards production. 

"In this regard work is continuing on, among others, the detailed metallurgical (including pyro-metallurgical) test work programme as part of its pre-feasibility studies. 

"The intention then is to add a scalability proposition to the realisable, relatively low-capex production scenario of the scoping study announced in April 2013, which envisages utilising a fraction of the current resource.

"We also expect further mineral resource upgrades on the Bushveld Vanadium Project's MML layer where drilling on both the A-B Zone and hanging wall is well underway in parallel with on-going metallurgical test work."

Broker RFC Ambrian repeated its 'speculative buy' on the stock, highlighting that the deposit now contains more than 490 million tonnes of ore at less than 200 metres - a significant amount to support the iron ore and titanium development assessed in the beneficiation scoping study. 

Analyst Craig Foggo noted the resource underlined the project's potential scalability but factors such as rail allocation and power would be likely restricting factors.

"With a significant resource delineated, Bushveld is now looking to add further value through the completion of studies to prove the economics and viability of the project," he said.

"We believe that Bushveld represents cheap exposure to iron ore, tin, phosphate, vanadium and thermal coal. While the numerous project undertakings are significant for a junior, Bushveld is well placed in terms of funds and management to execute the evaluation studies. 

"It’s likely that Bushveld will spin some of these assets out into separate vehicles once studies have been completed to a level that will attract equity to develop the projects further."

Bushveld shares eased 6.39% to go to 5.125p.

Quick facts: Bushveld Minerals Ltd

Price: 11.4333 GBX

LSE:BMN
Market: LSE
Market Cap: £135.06 m
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