Sable Mining Africa Ltd. said it has been granted a license to start work on its Nimba iron-ore project in Guinea, almost three years after it bought the rights to the deposit. The stock surged to a six-month high.
President Alpha Conde signed the license, allowing Sable to start developing the mine, the London-based company said in a statement today, confirming an earlier Bloomberg News report that cited a person with knowledge of the decision.
Sable estimates its Nimba project in southeast Guinea contains about 135 million metric tons of the steelmaking ingredient. The company has said it will seek to rail the ore through neighboring Liberia for export.
“There are two more steps to full permitting –- export decree, then rail allocation,” GMP Securities Ltd. said in a note to investors today. “We see little logic to granting a mining license without export decree, so see that as a natural follow-on shortly.”
Sable rose 11 percent to 9.9 pence by the close in London trading, the highest since March 6. The volume of shares traded was more than double the three-month daily average. The FTSE 350 Mining Index fell 1.5 percent.
“The granting of the license is a landmark achievement for Sable Mining which will pave the way for us to begin development,” Chief Executive Officer Andrew Groves said in the statement. “We will continue to work closely with the relevant authorities to ensure the timely issuance of our export decree.”
The Guinean government is reviewing some mining licenses as it seeks to improve transparency in the industry. Besides bauxite, an aluminum ingredient, Guinea has vast reserves of iron ore, gold and diamonds.
Rio Tinto Group, BHP Billiton Ltd., the biggest mining company, and Vale SA are among those with projects in the country.
Rio, the second-largest mining company, said this month that its $20 billion Simandou iron-ore project in Guinea may start in 2018 at the earliest, three years behind the initial target, pending completion of funding.
Sable was founded by Groves and former England cricketer Philippe Edmonds. The pair previously operated Central African Mining & Exploration Co., which they sold to Eurasian Natural Resources Corp. for about 584 million pounds ($943 million) in 2009.