The government of Kenya has granted
At last count, Kwale was home to an audited mineral resource of 254 million tonnes of mineralized sand grading 1.7% ilmenite, 0.4% rutile and 0.2% zircon. Of the total resource, 38 million tonnes are in the measured category whereas 216 million tonnes are indicated. The resource comprises three adjacent deposits: North, Central and South. The Central dune contains the highest concentration of heavy minerals.
Tiomin plans initially to mine 10 million tonnes annually, from which would be produced 330,000 tonnes of ilmenite, 77,000 tonnes of rutile, and 37,000 tonnes of zircon in each of the first six years. The production figures represent 6%, 18% and 3% of global annual output, respectively.
In late 2003, Australian-based Ausenco reviewed Tiomin’s feasibility study at Kwale and confirmed, among other things, the project’s estimated capital cost of US$120 million (excluding working capital and contingencies). Ausenco also suggested relocating the processing plant next to the wet concentrator, while eliminating the ilmenite-roasting and zircon-leaching circuits.
The operation is projected to generate around $80 million in annual revenue and $47 million in pretax operating cash flow over the first six years. Excluding financing charges, payback of the initial US$120-million capital investment would come in 3.4 years. Kwale’s total mine life is pegged at 13 years.
Tiomin has signed letters of intent and sales agreements covering about 60% of the projected revenues from Kwale for the first 3-5 years of production.
The feasibility study excludes some 116 million tonnes of indicated resource in the North dune.
Once Kwale is in production, Tiomin plans to develop three other deposits along the coast with a total resource of more than 950 million tonnes of indicated and 1.9 billion tonnes of inferred mineral sands.
Kwale has been embroiled in controversy since its discovery in 1996; local residents have voiced concerns over the project’s environmental effects and compensation and resettlement. In late June, the Kenyan government set aside some 11,000 acres of land encompassing the collapsed Ramisi sugar factory for the resettlement of affected residents. Authorities will also assess compensation for the loss of crops, trees and infrastructure. Tiomin has agreed to pay compensation of US$1,009 per acre.
Earlier this spring, Tiomin acquired a 3-acre parcel of land on the southern side of Mombasa Harbour, where it plans to build a ship-loading facility for production from Kwale, 50 km to the south. Tiomin had intended to build a similar facility at Shimoni but changed its plans to soothe the environmental concerns of local residents. The Shimoni site had been previously approved by the government. Mombasa Harbour is the second-largest port on the eastern coast of Africa.
Negotiations are under way with major international banks and other financial institutions for project financing.
Be the first to comment on "Tiomin lands Kwale licence"