Aim-listed Kropz has reported a delay in the ramp-up of operations at the Elandsfontein phosphate mine, in South Africa’s Western Cape province, owing to unexpected ore variability.

The company explains that mining rates and associated delivery of ore to the plant from the current mining area have been compromised owing to the presence of competent banks of hard material within the orebody that were previously unknown.

Kropz says this hard material cannot be mined using free-digging methods and, therefore, necessitates the company first test the mechanical breakage of the material using new equipment brought to site and identify alternative mining methods.

The company has also started with drilling activity to assess the impact of this hard material on the future mine plan of Elandsfontein.

Once this drilling is complete, Kropz will publish a revised mineral resource estimate, if necessary.

The delay in ramp-up of operations at the already delayed mine requires funding of R70-million, of which R13.5-million will be drawn down from Kropz’s existing conditional convertible equity facility with shareholder African Rainbow Capital (ARC) Fund, marking the full-drawdown of R177-million since the facility was announced in May.

Kropz will also draw down R60-million from a R121-million bridge loan facility it agreed with ARC earlier in August.

The company is exploring further funding options with ARC to fund any additional working capital requirements for Elandsfontein through to positive cash flow.

The Elandsfontein project is 70%-owned by Kropz and 25%-owned by ARC, while Kropz itself is 78%-owned by ARC.

The Elandsfontein project has been plagued by various delays since October 2017 when its water-use licence was contested by an environmental protection group. Other challenges have included changes to its processing plans and Covid-19-related delays.

While the project was first scheduled to start producing phosphate in 2018, it reported first production of phosphate rock concentrate only on March 18 this year.

ARC remains committed to seeing the project through, particularly as market demand for phosphate and fertiliser remains strong.

Elandsfontein can deliver one-million tonnes a year of phosphate rock once ramped up to steady state, for an initial mine life of 14 years.