MZI Resources secures further US$1M funding from RCF
MZI Resources (ASX: MZI) has secured a further US$1 million of short-term funding from cornerstone investor Resource Capital Fund VI (RCF) to continue engineering and other work at its flagship Keysbrook mineral sands project in Western Australia.
This further demonstrates the support
from RCF in MZI and in Keysbrook given it currently owns a 14.9%
shareholding in MZI which would increase to 18% with the additional
funding.
This adds to the existing US$3.5 million short-term loan
facility, which RCF has agreed to extend the repayment date to 30 June
2014, as MZI finalises longer-term debt funding.
MZI Chief
Executive Officer Trevor Matthews said the variation to the Facility
reflected RCF’s strong support for the development of the Keysbrook
Project.
The company requires total funding of about US$105 million and is negotiating credit approved conditional offer from banks.
Short Term Funding Variation
Under
the variation, the company will pay RCF an extension fee of US$105,000
to extend repayment of the US$3.5 million loan to 30 June 2014 from 31
March 2014.
This is expected to be repaid using proceeds from the
draw-down of funds from the previously announced US$41.5 million
Keysbrook funding package provided by RCF.
Should approval under
the Foreign Acquisition and Takeovers Act be obtained, MZI plans to
repay the additional US$1 million through the issue of shares,
increasing RCF’s interest in the company to about 18% from the current
14.9%.
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.
MZI had in January signed a key sales agreement for all
zircon concentrate to be produced from its Keysbrook mineral sands
project in Western Australia, bringing to 60% its production covered by
sales contracts.
Analysis
The variation to the existing US$3.5 million short term loan facility from Resource Capital Fund gives MZI Resources a further US$1 million to continue engineering, design work and other
activities as well as extending the repayment date to 30 June 2014 as it
finalises longer-term debt funding.
It also sends a significant signal to investors with the support from RCF, the investment and private equity firm.
There is significant catalysts and market value accretion point ahead for MZI including:
- Completion of the US$41.5 million equity/mezzanine funding from RCF subject to shareholder approval;
- Finalisation of debt funding;
- Securing offtake agreements from leucoxene (88% TiO2) products; and
- The start of construction.
Proactive
Investors maintains its valuation and share price target of $0.042 to
$0.055 for MZI within the next 6-9 months assuming finalisation of
funding.
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