Australian-based BeMaX Resources has reached a deal to buy
The tenements host the Pooncarie mineral sands project — the first major, fully permitted mineral sands development in the region.
BeMaX can acquire SGW’s 25%-stake, giving it full ownership of the project, in return for A$14 million, consisting of 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’s raising financing and gaining shareholder approval by October.
The plan 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 financing for the acquisition or Dec. 5, 2002, whichever comes first.
Also under the deal, SGW has agreed to hang on to its 17% stake in BeMaX for at least 10 months after the deal’s closing.
Meanwhile, BeMaX has wrapped up sales contracts with a major U.S.-based titanium pigment producer covering the bulk of production from the project. The contracts cover secondary ilmenite (65% TiO2) and leucoxene (68% TiO2) products. Talks aimed at securing sales contracts for premium-grade zircon and rutile products 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.
Current plans at Pooncarie call for initial development of the Ginkgo deposit at a price tag of A$160 million. Development of the Snapper deposit would begin in the eighth year. The two deposits have a projected life span of 25 years, equivalent to projected revenue of A$2.8 billion.
At a discount rate of 10%, Pooncarie’s net present value comes to A$240 million, the internal rate of return is pegged at 50%, and the payback period would be just more than three years.
Beginning in 2004, the operation would produce 450,000 tonnes of heavy mineral concentrate annually via low-cost dredging and wet concentration. The material would be shipped to a mineral separation plant in Broken Hill, 200 km to the north.
The 0.6-by-14-km Ginkgo deposit averages 25 metres in thickness and hosts proven and probable reserves totalling 184 million tonnes running 3.1% heavy minerals for 5.7 million tonnes of heavy minerals comprising 44% ilmenite, 12% rutile, 10% zircon, and 20% leucoxene. These figures are based on a cutoff grade of 1% heavy minerals.
Initially, BeMaX will target Ginkgo’s high-grade zone, which averages 6% heavy minerals along more than half the deposit’s western boundary.
Disseminated mineralization at Ginkgo is hosted by clean, unconsolidated quartz sands with slimes of only 2%. The deposit lies beneath 25 metres of overburden.
The 7.9-km-long Snapper deposit lies 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% heavy minerals. The zone averages 755 metres in thickness, and is low in slimes (2.6%) and believed to be amenable to low-cost dredge mining.
Mineralogical studies on nine samples from Snapper averaged 15% rutile, 11% zircon, 10% leucoxene and 43% ilmenite. Snapper is currently the subject of a feasibility study; core and infill reverse-circulation drilling are aimed at bringing the resource to the measured category.
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