Condor Blanco Mines completing €10 million debt funding
Condor Blanco Mines (ASX: CDB)
will soon be able to implement full production at its Marianas
magnetite tailings project in Chile with completion of its €10 million
(A$14.7 million) debt funding now in its final stages.
The funds will also allow the company to pursue acquisition of The Duel hard coking coal project in South Africa.
Chairman Dr. Paul Crosio has arrived in Zurich and is overseeing completion of the final documents with the lender.
The
final instrument which provides the underlying security for this
transaction has been registered to Condor and security will be
transferred to the lending party within 7 days.
“With near €10
million finance coming, Marianas and Signet will give Condor a clear
path to shareholder value creation over the next three years,” managing
director Glen Darby said.
“We are pleased that the lender is now working on the final documentation and look forward to receiving the funds.”
Marianas
The
Marianas Magnetite Tailings Project covers the mining and upgrading of a
known supply of magnetite and hematite tailings located just outside
the mining city of Copiapo.
Condor Blanco holds 50% of the project and has the right to acquire 100% of this project prior to 30 June 2014.
Tailings
would be processed onsite into a saleable concentrate that would then
be transported to an iron ore export facility at Caldera via the
existing freeway.
The company has a Heads of Agreement with
Lacerta Finance and Mining, a Chilean mining contractor, that will lead
to the processing of 60,000t/month and within three months of
permitting, 100,000t/month to be reached before the expiry of one year.
Lacerta
will relocate its recently purchased magnetite plant and all necessary
mining equipment to Marianas on receipt of final mine permits.
The Duel Project
Condor
is in a Heads of Agreement with Hong Kong company Signet Coking Coal
Limited that grants it the right to acquire a majority stake of up to
50.3% in The Duel and Tshipise 2 projects
This is currently being
reviewed by an independent third party though an initial Project
Exploration Report stated that Tshipise could host multiple hard coking
coal projects while The Duel project could easily supply the majority of
South Africa’s imported hard coking coal quota of between 3 million and
4 million tonnes per annum.
Based on available data, The Duel
project could produce two products, one a primary high-grade coking coal
and the other a secondary high-grade thermal coal.
The ability
to produce a high-grade thermal coal as a middling product heavily
reduces operating costs and expenditure, increasing the primary product
margin.
A drilling program is planned for The Duel to JORC the
resource as well as a definitive feasibility study (DFS) program for The
Duel is expected to be funded by Condor with costs expected to range
from €10 million.
The drilling and resource definition program will be run in parallel and are expected to be completed by November 2014.
Condor
will then be able to continue with acquisition of additional interest
in Signet subject to the terms of the Definitive Agreement.
The
tenements surround existing projects, and particularly the Makhado
(including Telema & Gray) and Mount Stuart Projects owned by Coal of Africa Limited (ASX:CZA).
These
projects have JORC compliant gross in situ tonnes of 879.74 million
tonnes and 407.16 million tonnes respectively, for a total of over 1
billion tonnes of which 466.62 million tonnes is at the highest
(measured) level of confidence.
Importantly, the position of the
coal seams on the CoAL tenements suggests direct continuity through the
south-western license of The Duel. This has been confirmed by drilling
on The Duel in May 2012. The program consisted of two Reverse
Circulation drill holes (500m apart) and one diamond core drill hole to a
depth of almost 300 metres.
Analysis
Completion of the €10 million debt funding will allow Condor Blanco Mines to bring the Marianas Magnetite Tailings Project into production and complete acquisition of The Duel Hard Coking Coal Project.
It also allows the company to begin the drill-out and feasibility work at The Duel.
Cash flows from Marianas tailings will allow the company to tap further funding to ramp up production at the iron ore project.
The Duel Hard Coking Coal Project is also well advanced given that a full Bankable Feasibility Study is due to commence soon.
Proactive
Investors had noted on 13 March 2014 that the company remains lightly
rated at its then current share price of $0.006, (market cap of $2
million) if a line is taken through ASX-listed Universal Coal (ASX:UNV) which is now capped at circa $42 million and has commenced first sales from its South African coal project.
Since then, shares in CDB have nearly tripled to an intra-day high of $0.017 today.
So while early days, Condor's coal projects in South Africa look to have potential to put its current valuation to shame.
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