MZI Resources receives US$3.5M loan from Resource Capital Fund VI
MZI Resources’ (ASX: MZI)
cornerstone investor Resource Capital Fund VI (RCF) has provided a
US$3.5 million short-term loan facility to progress its Keysbrook
mineral sands project in Western Australia while it finalises
longer-term debt funding.
Notably, the company is in advanced
negotiations with a number of potential lenders in relation to their
indicative term sheets and expects to receive credit-approved offers of
debt funding in late January or early February 2014.
These
proposals follow reviews of previously-completed due diligence reports,
project site visits and discussions with senior management and advisers.
Nedbank
Capital has since October last year received credit approval covering
50% of the project finance debt facilities for developing Keysbrook.
Chief executive officer Trevor Matthews said the short-term loan reflects RCF’s strong support for Keysbrook.
RCF
has a 14.9 % stake on a shares on issue basis having in October this
year provided a key US$41.5 million equity funding package that is
subject to shareholder approval and certain conditions.
The
RCF loan has an interest rate of 10% and is secured over the company’s
assets for the facility term. MZI plans to repay the RCF loan by 31
March 2014 using proceeds from the drawdown of funds from the funding
package.
MZI is currently undertaking early-stage engineering, design work and other activities at Keysbrook.
Keysbrook Mineral Sands Project
The
Keysbrook Project will produce an average 91,000 tonnes per annum of
mineral sands products from 110,000 tonnes of dry heavy mineral
concentrate. This comprises:
- 26,000 tonnes per annum (dry) of leucoxene 70% titanium dioxide;
- 36,200 tpa (dry) of leucoxene 88% titanium dioxide (L88); and
- 28,700 tpa (dry) of zircon concentrate.
Heavy
mineral concentrate will be trucked about 120 kilometres to Doral’s
mineral separation plant, which is just 10 kilometres from the Bunbury
Port, for toll treatment.
Keysbrook has total development costs
of A$64.3 million and is expected to have LOM average operating costs of
A$34.1 million per annum, or A$379 per tonne of product.
It has
total Proved and Probable Ore Reserves of 26 million tonnes grading 2.6%
for in situ total heavy minerals of 670,000 tonnes. This is sufficient
for a mine life of 5.5 years with potential for extension to more than
15 years.
Analysis
MZI Resources continues to draw closer towards completing debt funding negotiations
for its Keysbrook Minerals Sands Project and the short-term loan
facility from Resource Capital Fund will allow it to continue the
early-stage engineering, design work and other activities until they are
finalised.
Offtake sales agreements are also in progress and their completion
will allow project funding to become available and for construction to
commence.
Given the project metrics, we believe these negotiations are likely to bear fruit early next year.
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