Australian-based BeMaX Resources has agreed to buy Sons of Gwalia‘s (SGW) 25% stake in the BIP joint venture, which controls extensive tenements in the Pooncarie region of the Northern Murray Basin in New South Wales, Australia.
The tenements host the Pooncarie mineral sands project — the first major fully permitted mineral sands development on the NSW portion of the Murray Basin mineral sands province.
Under the deal, BeMaX can acquire SGW’s quarter-stake in return for A$14 million — A$10 million in cash up front, plus A$4 million in cash and/or shares within a year. The agreement is subject to BeMaX raising financing and gaining shareholder approval by the end of October.
The plan also grants SGW an option to buy back half of the project for A$25 million in cash. SGW’s option is good for 30 days after BeMaX secures its financing for the acquisition or Dec. 5 2002, whichever comes first.
BeMax has also wrapped up sales contracts with a major U.S.-based titanium pigment producer covering the bulk of production from the project. Pending formal documentation, the contracts cover secondary ilmenite (65% TiO2) and leucoxene (68% TiO2) products. Talks aimed at a final sales contract for premium grade zircon and rutile product are ongoing. All of the contracts are subject to project financing and BeMax’s acquisition of SGW’s 25% stake in the BIP joint venture.
The current plan at Pooncarie envisages the initial development of the Ginkgo deposit at a price tag of A$160 million. Development of the Snapper deposit would begin in year eight. The two have a projected lifespan of 25 years producing revenue of A$2.8 billion.
Producing 450,000 tonnes of heavy mineral concentrate annually, the operation would ship its production to a mineral separation plant in Broken Hill, about 200 km to the north.
BeMaX’s Managing Director, Mr Stephen Everett, said in a prepared statement, “We remain on track, subject to project financing, to commence construction activities at Ginkgo in the fourth quarter of 2002, with commissioning scheduled for the end of 2003 or early 2004 and first product delivery to market planned for the third quarter of 2004.”
The 0.6-by-14-km Ginkgo deposit averages 25 metres in thickness and is host to proven and probable reserves totalling 184 million tonnes running 3.1% heavy minerals for 5.7million tonnes of heavy minerals comprising 44% ilmenite, 12% rutile, 10% zircon, and 20% leucoxene.
The 7.9-km-long Snapper deposit lies about 10 km to the southwest and contains an independently estimated indicated resource of 109 million tonnes of 4.8% heavy minerals based on a cutoff grade of 1 HM. Mineralogical studies on nine samples averaged 15% rutile, 11% zircon, 10% leucoxene, 43% ilmenite.
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