Over the next two years, South African mining house Anglo American plans to spend at least US$7 million exploring Sutton Resources’ (STT-V) Kabanga nickel project in northwestern Tanzania.
Exploration to date by Sutton has outlined a nickel resource of up to 31 million tonnes. Within this overall resource, Anglo has calculated a higher-grade minable resource of 12.7 million tonnes grading 2.1% nickel and 0.16% cobalt.
Officials from both companies attended a signing ceremony for the joint-Venture agreement in Dodoma. Roman Shklanka, Sutton’s chairman, described the deal as “good for Sutton, for Anglo and for the people of Tanzania.”
Under the terms of the agreement (which is still subject to various approvals and permits), Anglo can earn a 60% interest by spending at least US$27 million on exploration, development and related studies.
The company has four years in which to complete a feasibility study and, thereafter, must arrange project financing for 60% of the cost of building a mine. Under certain conditions, Anglo may have to arrange the equity portion of development costs, including Sutton’s 40% share.
Capital costs to build a mine and related facilities are estimated at US$135 million, with production deemed possible by the year 2001.
Anglo is negotiating to obtain an agreement for Sutton’s Kagera nickel-Cobalt belt, adjacent to, and running northward from, the Kabanga licence.
The Tanzanian government has a 10% interest in Kabanga and Kagera, as well as a 3% net smelter return royalty.
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