Shares in Tiomin Resources shot up 4.5, or nearly 14%, to 37.5 in early-afternoon trading in Toronto on Feb. 9, after the company announced government support for its Kwale titanium-sands project in Kenya.
According to Tiomin, Kenya’s Mines Commissioner has formally reconfirmed in writing its approval and support of the project, about 50 km south of the port city of Mombasa.
The company also says that the project’s fiscal/investment agreement has entered the final stages of negotiation.
Tiomin quotes Kenya’s Environment Minister Dr. Newton Kulundu as saying: “The mining lease agreement stands – I wish to reassure Tiomin that there are no changes to our mining policies and we are all anxious that the project get started without further delay.”
The company also says resettlement issues have been resolved with the acquisition of the land encompassing the collapsed Ramisi sugar factory.
Last summer, Kenya’s minister of natural resources officially approved a special mining lease for Kwale. The 16-year lease, originally issued in mid-December 2002, after years of review, can be renewed for a further 10 years. The lease allows the junior to mine and process Kwale’s heavy mineral sands. The project has also been given an environmental go ahead, as has a port facility at Shimoni.
Says Tiomin’s president J.C. Potvin: “The optimization of the Kwale engineering report is on schedule to be completed by late April. Tiomin and the Government of Kenya are working diligently toward completing the negotiations on the fiscal and operating parameters for Kwale, which will have a significant impact on the Kenyan coastal economy.”
Tiomin hopes to begin construction at Kwale later this year. The construction phase will see some 1,000 jobs created.
A feasibility study completed in 2000 envisaged an open-pit operation producing 330,000 tonnes of ilmenite, 75,000 tonnes of rutile and 37,000 tonnes of zircon annually for the first 6 years. Cash flow was projected at US$40 million per year, resulting in a payback period of three years. Kwale’s total mine life is pegged at 13 years. The capital cost estimate is US$120 million.
Kwale is home to a resource of 200 million tonnes of mineral sands grading 2% ilmenite, 0.5% rutile and 0.3% zircon. The deposit, which comprises two large Pliocene aeolian dunes, is on a 4.5-sq.-km property about 10 km inland from the coast.
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