Tiomin eyes $3 million for Kwale

Tiomin Resources (TIO-T) has inked a deal paving the way for Harris Partners to use their best efforts to raise up to $3 million via a private placement of up to 15 million units.

Each unit, comprising one share plus half a share purchase warrant, will be priced at 20 each. One full warrant allows the holder to acquire one Tiomin share for 30 for 18 months following the deal’s closing or 45 days after Tiomin informs the warrant holders that it has been issued a mining licence for the Kwale project, whichever comes first.

The financing is subject to regulatory approval.

Tiomin plans to use the proceeds to advance its Kwale titanium-sands project southwest of Mombasa, Kenya.

Earlier this summer, the government of Kenya granted the project an environmental licence after a two-year review of the company’s environmental impact study. The government also gave the go-ahead for a proposed port facility at Shimoni.

Tiomin still needs to negotiate a mining lease and other permits before construction can begin. The company must also come up with a plan to resettle residents of two towns on the permit area.

Kwale plays host to a resource of 200 million tonnes of mineral sands grading 2% ilmenite, 0.5% rutile and 0.3% zircon. Tiomin’s plan calls for an open-pit mining operation to produce 300,000 tonnes ilmenite, 38,000 tonnes zircon and 75,000 tonnes rutile annually for six years. The total mine life is about 13 years.

Long term, Tiomin intends to subsequently develop two other large titanium-bearing mineral sands deposits in Kenya – Kilifi and Mambrui. Extensive mineralization has also been identified on the Vipingo exploration license.

Kwale has long been the target of intense protest by environmental groups who criticized the company’s environmental impact study and commissioned one of their own that said the project could destroy surface and groundwater flow patterns and possibly contaminated a major aquifer.

Earlier this spring, a lawsuit, launched by three local landowners, in Kenya against the company’s local subsidiary was dismissed. The suit sought to prevent development of the project.

Tiomin currently has 58.7 million shares issued and outstanding. The shares have recently been trading in the 20-range, at the lower end of their 5-78, 52-week range on the Toronto Stock Exchange.