The government of Kenya has finally evicted seven farmers who were refusing to leave the land on which the Kwale mineral- sands project is to be developed, which resulted in Toronto-listed miner Tiomin Resources halting the development of the project.



The farmers were refusing the compensation offered by the government for making way for the project. Production was initially scheduled for mid-2008, but will be delayed until the first half of 2009 at the earliest.



Tiomin president Robert Jackson tells Mining Weekly that the timing of the project has changed, but that the company hopes that, by shifting much of the construction effort to China, it will save on capex.



Jackson points out that the primary challenge has been moving the process ahead in Kenya, a country with no history of resource development.



“The major milestone was to pull together our internationally acclaimed $155-million debt financ- ing and the $46-million of equity. “This deal imploded when we could not get access to the land to start construction,” says Jackson.



He adds that the Kwale mineral-sands project is “a good project”, but has suffered from increasing capex owing to delays.



“It has good grades; [it is] not large but has potential for additional exploration. We are confident that the project will be built,” he maintains.



Delays and rising costs have caused the project’s lenders to freeze the $155-million debt facility that was in place for the project. They indicated that the economics and significant issues related to Kwale precluded Tiomin from borrowing under the debt facility.



This culminated in Tiomin and Jinchuan Group, of China, entering into a memorandum of understanding to finance and expedite the development of the Kwale mineral sands project.

Jinchuan is investing about C$10,9-million in Tiomin by acquiring 72 521 134 common shares of the company at C$0,15 a share.



The company reports that the definitive subscription agreement for the private placement remains subject to regulatory and Tiomin shareholder approval.



Tiomin chairperson and CEO Jean-Charles Potvin comments: “Jinchuan and Tiomin are making good progress to advance the relationship between [the] companies and we remain firmly in favour of this transaction.”