Kumba Iron Ore Limited reports all construction activities at its Sishen Western Expansion project, in South Africa, have been completed and the development remains within budget.
The relocation of the Transnet railway line, in May 2013, is considered a major milestone of the development project. The railway line was moved from the west of the Sishen pit to the far western extent of the Sishen Iron Ore Company (Pty) Ltd property.
Sishen Iron Ore and Transnet have engaged in an agreement whereby Sishen Iron Ore will be granted the surface rights over the properties where the railway line used to run and Transnet will be granted the surface rights of the properties where the new railway line is set to be laid down. Registration of the transferred ownership rights is currently being processed at the Deeds Registry.
Due to Transnet previously holding the surface rights to the Rail properties, they have been excluded from the Sishen Mining Right area. The company has submitted an application to the Department of Mineral Resources to obtain the rights relating to the Rail properties. Should the application be unsuccessful, the project will be significantly affected in that the company would potentially be unable to access approximately 33% of the Sishen reserve that is included in its current estimate.
If the matter is not resolved by Kumba Iron Ore’s financial year end (31 December 2013), the company will have to conduct an in-depth assessment to establish whether its Ore Reserve classification must be restated.