Kaboko rings in first sales of manganese to Noble Group in Zambia
Kaboko (ASX:KAB) has rung in a first sale of 2,000 tonnes of high-grade manganese ore from the Mansa mine to the Noble Group under its $10 million pre-pay and offtake agreement.
The ore is currently being loaded on site for delivery in the coming weeks from the Mansa mine in Zambia.
To ramp up production and sales, Kaboko has drawn down a further US$1.16 million from Tranche B of the $10 million facility from Noble for additional key mining plant and equipment to accelerate production from Mansa.
The facility underscores the support from Noble Group for the project and upside at the very high grade manganese mine.
Milestones and Catalysts
- Production is set to increase from 5,000 tonnes per month to in excess of 10,000 tonnes per month.
- A maiden JORC resource is on track for Q3, 2013 with drilling underway
- New high-grade African manganese opportunities have been identified for review.
Production fast track
Kaboko has rapidly brought the Mansa Mine into operation since the completion of the Noble Agreement in March, 2013.
Production from the mine has reached 5,000 tonnes per month, with a current stockpile of 10 000 tonnes high grade manganese on site and a further 22,000 tonnes of alluvial unprocessed overburden being stockpiled.
Initial testing of the first delivery undertaken by independent laboratories returned results of 50% plus manganese from grab samples which are in line with expectations.
Further testing will be undertaken as part of completion of delivery. A second shipment of 2,000 tonnes of high grade manganese will then be loaded for delivery from the existing stockpile on site.
Additional Mining Plant and Equipment
The further US$1.16 million will see an upgrade of key plant and equipment with a view to increase production to in excess of 10,000 tonnes per month. This includes the addition of a scrubber trommel and jig circuit to be used in conjunction with the semi-modular crushing plant as well as a front end loader, excavator and other key equipment items.
This additional drawn down underlines the ongoing Noble Group support for the project and the ongoing development of the company.
The scrubber trommel and jig circuit will be used to recover 25-30% of the high grade manganese nodules that
are in the alluvial overburden and will be initially used to process the alluvial stockpile already on site. This unit
will upgrade the manganese ore mined, particularly from the alluvial overburden, and is also able to be used to
process material during the wet season.
Kaboko said it anticipates that this capital investment in further mining plant and equipment will see production ramping up to achieve targets of 120,000 tonnes per annum, deliverable under the Noble Agreement.
Kaboko’s CEO, Tokkas Van Heerden said “I am very pleased to announce the first sale of commercial scale
production of the company’s high-grade manganese to the Noble Group under the terms of the Noble
"I welcome the further investment of Noble into Kaboko some 12 months in advance of the schedule
anticipated in the Agreement. This delivery of ore and acceleration of funding cements the partnership between
the company and the Noble Group and provides a strong foundation for continued production and cash-flow
Drill program and maiden JORC Resource
The initial scoping study on the Northern Zambian manganese project at Mansa was completed by independent consultant, Minxcon, which included an indicative high grade manganese resource estimate and mine plan for operations based on an initial 7 year mine plan.
The exploration program to drill approximately 24 holes (1,200m) targeting extension of existing mineralisation
zone is currently underway.
The results of this program will be used in conjunction with the recent scoping study which provided the foundations for a JORC resource statement at the Mansa Project which is expected to be completed Q3 2013.
Significantly, it is important to note that the Mansa Project license area covers approximately 90km2 and the scoping study focused on the known mineralisation area which represents less than 2% of the total Mansa Project area, emphasising the significant exploration potential of the project.
The sale is value accretive for Kaboko and we expect the share price to move higher today on the first sales of high grade manganese ore to Noble.
The further investment of Noble into Kaboko some 12 months in advance of the schedule anticipated in the agreement is a bullish sign for growth in the current share price and market cap. of Kaboko over the next months. Capped at just $4 million, is derisory given the ramp up in production from Mansa from 5,000 tonnes per month to in excess of 10,000 tonnes per month. It does not incorporate the increased revenues and cash flow generated as a result.
With a JORC resource due in Q3, 2013 and the scoping study already released covering just 2% of the Mansa project there is exploration blue-sky upside. The Mansa project is a prize with manganese stockpiles grading 50% plus. for 6,000 tonnes in the last quarter.
That Kaboko is understood to be looking at a number of advanced manganese projects in other parts of Africa with high-grade ore bodies that are in or near to production is also a positive for an increase in market rating.
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