Africa-focused resources group Globe Metals & Mining is seeking buyers for the niobium it will eventually mine at its project at Kanyika, in the district of Mzimba, in Malawi, for which it is looking for development finance.
Globe Metals & Mining GM Neville Huxham tells Mining Weekly that the signing of prepurchase contracts will make it easier for the company to secure financing for mine construction, which will cost an estimated $400-million.
“We are optimistic that financing for the project will be [secured] once potential buyers . . . are identified.”
Huxham says Globe Metals & Mining, which had hoped to acquire project development finance from Chinese sources, is in talks with local banks, which are expected to syndicate with international banks.
“We had expected to rope in Chinese financiers but, with the economic slowdown in China, we feel our chances of sourcing funding from that country are now slimmer. “We are, therefore, talking to local financiers, asking them to consider giving us loans to develop the project, and this will be easy if we identify a ready market for the products.”
Financial institutions including Standard Bank and the National Bank of Malawi have expressed interest in financing mining projects in the country.
Says Standard Bank Malawi CEO Andrew Mashanda: “We are always ready to finance business ventures with a [sound] business plan. We coordinate and execute our clients’ financing and banking requirements across Africa and in emerging global markets. Our highly regarded commodity and currency trading desks offer 24-hour trading capabilities to support price-risk management and hedging strategies.
“In addition, we carry out in-depth analyses of commodity trends and stay on top of the latest developments in the mining and metals industry. “We continue to play a leading role in arranging facilities for many of the most significant mining projects in Africa and other key emerging markets.”
Earlier this year, the Malawi government granted Globe Metals & Mining a licence to develop the Kanyika uranium prospect. However, the company can only start mine construction after concluding a development agreement with government.
Globe submitted a draft development agreement that was a replica of the development agreement for Paladin’s Kayelekera uranium mine, in Karonga, which gave government a 15% shareholding in the mine in exchange for a reduction in payable royalties from the prescribed 3% to 5%.
Malawi’s law also subjects mining companies to a fixed income tax of 30%.
Globe Metals & Mining, which is listed in Australia, has spent over $15-million to develop the Kanyika deposit, which, besides niobium, hosts uranium and tantalum.
China Mineral Exploration & Development Bureau is a major shareholder in Globe Metals & Mining, with a 75% shareholding, and the balance is held by Australian investors.