Lifezone shares rise on US$50M financing, Tanzania refinery licence

A consortium of marquee mining investors are backing Lifezone Metals (NYSE: LZM) and the development of its flagship Kabanga project in northwest Tanzania, which is on track to reach the feasibility stage later this year.

On Thursday, an investor group led by Harry Lundin (Bromma Asset Management) and Rick Rule signed a binding agreement with the company for a US$50-million convertible debenture financing. 

The financing comes as sliding nickel prices over the past year has rendered some mines, particularly in Australia, unprofitable.

Lifezone went public last July following a business combination between special purpose acquisition company GoGreen Investments and Lifezone Holdings Ltd. At the time, the combined entity was valued at US$1 billion by the SPAC.

The New York-listed company pairs one of the world’s largest and highest-grade undeveloped nickel sulphide deposits in Kabanga with a proprietary processing technology, known as Hydromet, to produce cleaner metals in support of growing demand for batteries.

Lifezone acquired the rights to the Kabanga project in early 2021, and in the same year, was awarded a mining licence by the Tanzanian government, a key partner on the project alongside global miner BHP (NYSE: BHP; LSE: BHP; ASX: BHP), which has committed US$100 million in support.

Since then, it has made high-grade discoveries at Kabanga and posted a significant resource update in late 2023. The deposit is now estimated to contain 881,000 tonnes of nickel metal within 43.6 million tonnes of measured and indicated resource grading 2.02% nickel. Another 391,000 tonnes (17.5 million tonnes at 2.23% nickel) are in the inferred resource category.

Kabanga’s previous owners include Barrick Gold (TSX: ABX; NYSE: GOLD) and Glencore (LSE: GLEN) who spent US$293 million on exploration before their retention licence was revoked in 2018.

The debentures will bear annual interest equal to the secured overnight financing rate (currently 5.3%) plus 4%, and are convertible into Lifezone’s common shares.

Refinery licence

Also on Thursday, Lifezone announced it has received a multi-metals processing licence from the government for its facility at Kahama, located 340 km southwest of Kabanga.

The site, situated within a newly established special economic zone, stands to benefit from the legacy infrastructure of Barrick’s former Buzwagi gold mine next door.

With the licence, the company will be able to produce finished metals in-country, potentially reducing capital and operating costs, as well as reducing costs associated with transport of concentrate or other intermediate products.

“With the receipt of our Kabanga special mining licence, and now the Kahama refinery licence, we have a clear path to delivering a direct-to-metal solution and enabling the production of nickel, copper and cobalt in Tanzania,” Lifezone’s CEO Chris Showalter stated in a news release.

The company also made advancements in the metallurgical refining testwork using its Hydromet technology, which is said to have lower carbon footprint than the conventional pyrometallurgical smelting method. Test results showed nickel recoveries of over 98.5%.

Shares of Lifezone Metals gained 3.2% to US$8.19 by 10:00 a.m. in New York, giving the company a market capitalization of US$639.3 million.