David Flanagan says there could be tens of billions of tonnes of iron ore in Guinea, marking the region as the next Pilbara
His exploration minnow Arrow Minerals owns the Simandou North project, adjacent to a multi-billion development by a consortium including Rio Tinto often dubbed the ‘Pilbara Killer’
Flanagan regaled a WA Mining Club luncheon with tales from decades in the resources industry
David Flanagan made his name guiding the company that captured the essence of the 2000s iron ore boom — and later its bust — into the ASX 50.
Atlas Iron surged as the Pilbara opened to upstarts in the mid to late 2000s, before high costs saw it run into trouble as prices collapsed, eventually taken off the market in a $400m takeover from Gina Rinehart’s Hancock Prospecting two years after Flanagan passed on the baton in 2016.
But after detours in graphite, gold and lithium, where Flanagan memorably led advanced explorer Delta Lithium (ASX:DLI) for around a year before he was deposed as chair by major shareholder MinRes’ (ASX:MIN) boss Chris Ellison, Flanagan has returned to iron ore with Arrow Minerals (ASX:AMD).
There he hopes to be on the ground floor of the next major revolution in the world’s largest commodity market, the rise of West Africa.
It’s located on the doorstep of the multi-billion dollar Simandou project, where Rio Tinto (ASX:RIO), the Guinean Government and a host of Chinese JV partners are hoping to export ultra-high grade iron ore by the end of next year.
While precious little has been found outside the mammoth Simandou — 4.6Bt at over 65% Fe landlocked and untouched due to price volatility, political instability, allegations of corruption and a 650km path to port through dense jungle — Flanagan believes it can become a new iron ore province to rival Australia’s legendary Pilbara.
“They currently report a resource on our southern tenement boundary of 4.6 billion tonnes at 65%. Now a few of you in the room are geologists — they report that at a cut off grade of 58%,” he told delegates at a WA Mining Club luncheon yesterday.
“If you excluded ore in the Pilbara that went below 58%, there’d be no Robe, there’d be no FMG, there’d be no MRL, there’d be no Atlas and half of the Hancock production would fall over.
“If they were to drop their cut off to say 50% Fe like they do in the Pilbara, it’s my view that there’s 10s of billions of tonnes there and that the resource endowment of Simandou is actually comparable to the Pilbara.”
Arrow Minerals (ASX:AMD) and Rio Tinto (ASX:RIO) share prices today
But won’t that hurt the Pilbara?
Simandou’s development comes at a tense time for iron ore. Prices for 62% Fe fines — a benchmark largely related to the historic quality of the most traded product on the market, Rio’s Pilbara Blend — rose to over US$140/t last year despite weakness in the Chinese real estate sector known as the steel complex’s traditional engine room.
Prices have since fallen to ~US$109/t, having dipped below the psychological US$100/t level earlier this week with Chinese steel prices at more than six-month lows and stimulus measures to refire the economy responsible for producing almost 60% of the world’s crude steel yet to be spelled out.
If conditions weaken a major new source of supply could be the one thing the iron ore market does not need. But Flanagan does not believe in the moniker of Simandou as the ‘Pilbara Killer’.
“We could sit here and think that is going to be a threat to us, because (Guinea) definitely is going to be going after market share. But we have an opportunity in Western Australia to do something different, to innovate and to be better than we are today,” he said.
“And I don’t think we should see that it’s a foregone conclusion that we’re going to be displaced.”
He doesn’t buy into the idea either that failure to develop the project was down purely to endemic government corruption. A coup in 2021 brought a military junta into power which has attempted to kick Rio Tinto and the Chinese-backed Winning Consortium into gear.
“Our national GDP is trillions. Over there it’s $25 billion. So people talk about how there was some corrupt government which took the asset off Rio Tinto — it’s complete rubbish,” Flanagan argued.
“They sat there on a multi-trillion dollar iron ore asset, which could deliver prosperity for a nation for 25-30 years, and the government said enough is enough.”
Other stakeholders in Simandou — expected to produce as much as 120Mtpa across all four blocks owned by two separare JVs — include China’s biggest steelmaker Baowu and Rio JV partner and major shareholder Chinalco.
They are funding billions in infrastructure including a dual track railway line connecting pit to port.
Arrow kicked off drilling in February, with four rigs expected to be put to the task in the coming months.
If drilling is successful, it hopes to be able to access that infrastructure.
“This year we want to drill more than 200 holes. We closed off a raising in the last couple of days, so we’ve got the money to do it,” he said.
Now at Arrow Minerals, David Flanagan is one mining’s great entertainers, known for his role developing iron ore junior Atlas Iron. Pic: supplied
Different landscape
Reflecting on his long stint in the industry, Flanagan touched on a string of memorable tales from decades as a rock enthusiast.
They included a diverse set of events and experiences, including his role as an advocate for the application of space exploration technologies in the mining industry, running an investigation sparked by an Corruption and Crime Commission probe into his vice-chancellor just moments after becoming chancellor of Murdoch University, clashes with Kevin Rudd during the Mining Tax days and a tale of a supposed scheme deal that was almost scuttled as Flanagan and the Atlas board fought off an attempt from a third party to grab a major equity stake in its projects.
In Flanagan’s retelling, the Monday scheme meeting was delayed for over an hour before the merger was finally approved, in chaotic scenes reminiscent of the pivotal proxy vote for control of Waystar Royco in Succession.
One of his most adventurous yarns came from his time as a 25-year old geo at a gold mine in Ghana.
Flanagan used to take walks and skirt the margins of the Bogoso operation in Ghana because he thought the rocks were “amazing”. Then he got blamed for a water ingress that shuttered the operations of a group of artisanal miners next to Bogoso, around which Flanagan estimated some 20,000-30,000 semi-organised diggers had set up shop.
“They started to jostle me and there (were) probably 30 or 40 standing around in quite a tight circle. I suddenly got the sense of how this could just go really bad really quickly, because they had beheaded a geologist there a couple of years prior,” he recalled.
“I said to one of them. ‘Do you believe in Jesus?’ The guy say ‘yes, of course I believe in Jesus.’
“I was glad he believed in Jesus. I said so, the water came from the sky. The water came from God, so it’s not the company’s problem that your mine is flooded. It’s an act of God.
“He said to his mate, ‘maybe it isn’t, maybe it is act of God’. And the other one said ‘stop listening to the white guy. He’s just trying to confuse you.’
“Enough of them started arguing amongst themselves that I was out of there, I set a landspeed record back into the Toyota.”
Flanagan says the reception for the Aussie explorer has been more welcoming in 2024 Guinea.
“I got given a chicken I named Mary, turned out it was actually a rooster – it should’ve been called Bruce,” he joked. Sounds like a bit, but we’ll leave it up to the imagination.
On the quainter side of the comedy spectrum are Flanno’s picks for his memoir titles — Acts of Sheer Bastardry, a Yellowstone rip called Big Trucks, Red Rocks, Heart Attacks and Billionaires and the pick of the lot Conscious Incompetence, a leadership management handbook inspired by a reputed conversation with an executive at an iron ore major.
“I said, ‘so how’s business?’ He said, ‘David, we’ve now transitioned into a stage of conscious incompetence.’
“I said, ‘what does that mean?’ He says we realised how bad we are, but it doesn’t mean we’re doing anything about it.”
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