Shares in bauxite developer Canyon Resources (ASX:CAY) have climbed after Guinea – a leading supplier of bauxite – experienced its third coup d’etat in under 40 years. 

The unrest sent prices for aluminium rising briefly to 10-year highs on concerns that it will disrupt the global aluminium supply chain given that Guinea accounts for about 22% of the world’s production.

“If the political instability in Guinea disrupts its bauxite exports, we expect bauxite prices to lift,” Commbank analyst Vivek Dhar noted.

This is positive news for Canyon, which is progressing the Minim Martap project in central Cameroon, with its shares up 8.25% to 10.5c this morning.

Minim Martap has an ore reserve of 99 million tonnes grading 51.6% aluminium oxide and 2.4% silica dioxide within a broader resource of 1 billion tonnes at 45.3% aluminium oxide and 2.7% silica dioxide.

It is currently envisaged as a two-stage, two-port project with initial production exported through the port of Douala using existing rail and port infrastructure.

Canyon’s pre-feasibility study has outlined the first stage as a 5 million tonne per annum direct shipping ore project with low development capital requirements of just US$120m ($163.35m).

The second stage unlocks more tonnes and reduces costs by utilising the planned rail extension to access the deep-water port of Kribi.

Progressing to development

Late last month, the company reached a strategic partnership that will see Zhongye Changtian International Engineering Corporation of MCC (MCC-CIE) – the mining engineering division of global mining giant Metallurgical Corporation of China (MCC) – assist with financing, off-take, technical and business issues associated with the project.

This lends Canyon the assistance of a partner with extensive experience in building and operating mining projects in Africa, particularly bauxite mining and refining in Africa.

 

 

 

This article was developed in collaboration with Canyon Resources, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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