Kaboko Mining finds manganese grading 50% in Zambia
Kaboko Mining (ASX: KAB) has received independent confirmation that the 6,000 ton stockpile at its Mansa project in Zambia contains 50% plus manganese.
The initial testing of grab samples by independent laboratories comes as it prepares for commercial settlement of the offtake sale agreement with Noble Group.
The fixed crushing component of the processing plant has arrived at port and will be taken to site to process high grade manganese stockpile prior to delivery to Noble.
Separately, the company has concluded an agreement with Hon. Mwansa to acquire a 51% interest in large 525.9 square kilometre prospecting license in northern Zambia.
This is adjacent to its existing Mansa operation, giving it a large footprint in this region.
Initial work on this new licence will be undertaken to evaluate key surface outcrop areas over the two year term of the license to potentially expand current production activities at the Northern Zambian Mansa project.
Kaboko will immediately started initial evaluation and mapping of the new licence before it carries out 1,000 metres of trenching and drilling 10 exploration holes this quarter.
It is confident the addition of this licence to its portfolio will have a significant increase to its high grade manganese resources in Zambia, given there are indications of a similar geological structure to that at Mansa on the new licence.
“The initial indications are that some high grade outcrops exist on this new licence area and together with our existing mining operations we believe the combined mineralisation may potentially expand existing mining operations, potential resource size and be suitable to supply high grade manganese under Kaboko’s existing off-take agreement with the Noble Group,” chief executive officer Tokkas Van Heerden said.
Kaboko has an option to increase its stake in the new 13030-HQ-LPL licence to 75%.
Development of the new licence is expected to carried out in an efficient manner s it would largely use the establish and planned infrastructure at Mansa such as roads, processing plant and camp.
Kaboko had built the high grade stockpile at Mansa as commercial mining moves into full swing.
This had led to the discovery that the main vein reef was wider than expected at about 7 metres, leading to higher ore recoveries.
The company had also found that the overburden at its Mansa project in Zambia contains substantial manganese mineralisation with testing demonstrating that its manganese content can be processed as fines with a 20% recovery to produce a 50% plus product.
This is expected to decrease overall production costs of manganese ore from the main vein and produce an additional 3,000 tons of sellable ore a month taking targeted production to 8,000 tonnes per month by the fourth quarter of 2013.
Full CIF costs (production and logistics) are also line with previous estimates of $190-$210 per tonne made by independent consultant Mincon. Manganese prices remain at US$2,300 per tonne.
Kaboko and Noble have an offtake agreement in place under which the company will deliver to Noble 180,000 DMT per year of 48% manganese lump ore from its Zambian projects.
The company had recently received US$4 million advance under Tranche A of the US$10 million Prepayment Debt Facility and long term manganese ore Off-Take Agreement with Noble Resources, a wholly-owned subsidiary of Noble Group.
Under Tranche B, an advance of US$4 million will be provided upon delivery by Kaboko of 105,000 tonnes of manganese ore under the 10 year Manganese ore off take agreement.
Production at Kaboko is expected to ramp up to 10,000 tonnes per month by the fourth quarter of this year or first quarter of 2014.
This is further confirmation, if it was needed of the high grade tenor and prospectivity of the Mansa project and the regional exploration potential.
It reinforces the attractiveness of Kaboko Mining’s Mansa project, where full CIF costs have remained in line with previous estimates at $190 to $210 per tonne.
In addition, the new licence offers the company a large area that has the potential to host further Mansa style deposits while offering lower development costs due to the proximity to the infrastructure the company has established or is putting in place.
With commercial sale agreements with Noble Group imminent and potential for further growth in place, the company’s current market capitalisation of $4.66 million still offers investors the opportunity to gain exposure to a manganese producer.
Today's announcement recasts Kaboko in a whole new light, and renders the market valuation of sub $2 million as exceedingly light with the potential rendered in a neighbouring license area.
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