Considering West Africa specifically, Hunter Hillcoat at Investec says “iron ore equity prices continue to track lower, notwithstanding the fact that the underlying iron ore price remains remarkably resilient in the face of a broad commodity price rout. We acknowledge that there are market concerns of a looming glut of iron ore supply, but remain of the view that prices can be maintained around current levels for several years, enabling the new producers to entrench their positions. Unlike some other market commentators, we are not of the view that the iron-ore market will be materially over-supplied in the near term, although we do expect increasing supply, particularly from the majors, to eventually depress pricing. This is reflected in our iron ore price assumptions (62% Fe fines, FOB) of $126/t in FY13E, $123/t in FY14E and $115/t in FY15E, before reducing to a long term US$85/t (nominal) by the end of FY17E.

“We are, however, less confident that there will be the financial backing to support new developments and/or expansions, given weak global investment sentiment. For this reason, we have taken a more conservative approach in valuing new projects. It is now not so much a matter of determining a risked valuation for a project, as determining whether it is likely to go ahead at all.

“As a consequence, we have reduced our recommendations for Zanaga and Bellzone from Buy to Hold. The reality is that the projects do still offer the potential for considerable value generation, but there remains too much uncertainty surrounding both development parameters and financing to be more aggressive.

“We have increased our recommendation on London Mining from Sell to Buy, following the recent pull-back in its share price.

“African Minerals remains our preferred West African iron ore play, given its relative scale, growth options and more assured Chinese backing.” Its Tonkolili project has recently had a significant in situ resource upgrade from 5,100 Mt to 12,800 Mt. Low cost of transport and infrastructure, low stripping ratio and low processing requirement drive low cash costs. All Tonkolili project mining licences awarded, environmental permits issued and fiscal terms agreed with the Government of Sierra Leone.