TORONTO (miningweekly.com) – TSX-listed Tiomin Resources has signed a binding heads of agreement for the sale of its Kwale mineral-sands project to Australia's Base Iron Limited (BIL), the company announced on Thursday.

The news marks the end of an era for Tiomin, which spent more than a decade moving the Kwale project forward.

The company announced earlier this year it had agreed to buy diamond junior Vaaldiam Resources, and said it would shift its focus to diamond exploration, development and production, mainly in Brazil.

CEO Robert Jackson said at the time he was still in talks with prospective buyers for the Kenyan assets.

Tiomin was ready to start building the Kwale project in 2006, but was delayed by a local dispute over land access, which eventually cost the firm its debt package.

A few years later, the company agreed to sell 70% of the project to China's Jinchuan group, but closing of the deal dragged out, and Jinchuan eventually walked away last year.

BIL will buy the Kwale project, all the intellectual property associated with Tiomin's mineral-sands projects in Africa and an option to acquire 100% of Tiomin Kenya Limited.

In exchange, Tiomin will receive $3-million in cash upon closing and a cash royalty of 1,5% of all product revenue from Kwale, paid monthly in arrears.

“Upon closing, this transaction further strengthens Tiomin's balance sheet with more cash and a gross revenue royalty,” Jackson said on Thursday.

Pangea Goldfields, a 100%-owned subsidiary of Barrick Gold, will receive an additional 0,5% royalty on the same terms and conditions as Tiomin in exchange for waiving various rights that it had to the assets.

BIL will pay Tiomin a $60 000 deposit that is deductible from the $3-million payment and will pay a non-refundable $60 000 a month to sustain TKL until the proposed transaction closes or is terminated.

The transaction requires the approval of the government of Kenya, as well as from shareholders of BIL.

Jackson said it would be in Kenya's best interests to approve the deal in a timely manner.

“The Australian capital markets understand mineral sands much better than those of North America and we think BIL is well qualified to develop Kwale,” he commented.

"BIL is a reputable Australian junior with good management and sponsorship."

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