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Strandline raises A$50m to fund growth

6th April 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Mineral sands developer Strandline Resources will raise A$50-million through a share placement to institutional, sophisticated and professional investors to fund its growth aspirations.

The ASX-listed company on Wednesday announced that it would issue 116.3-million shares, at a price of 43c a share, representing a 3.6% discount to the ten-day volume weighted average price.

The share placement will be conducted under Strandline’s existing placement capacity, and will not require shareholder approval.

Strandline told shareholders that the proceeds would be used primarily to fund the near-term development of Strandline’s Fungoni mineral sands project in Tanzania, while in parallel advancing key feasibility studies and approvals for the large-scale Tajiri mineral sands project in Tanzania and the potential future expansion at Strandline’s Coburn mineral sands project in Western Australia, which was currently under construction.

“The strong demand for the placement, led by institutional investors, reflected the quality of Strandline’s mineral sands growth portfolio and enables the company to capitalise further on the growing global demand for critical minerals products,” Strandline MD Luke Graham said.

In light of the significant increase in global mineral sands prices and strong offtake demand, the company is accelerating preparations for its next project development in Tanzania and Australia.

The decision to ramp up activities follows the formation of the joint venture (JV) company with the Tanzanian government, Nyati Mineral Sands, which will hold all Strandline’s Tanzanian mineral sands assets, including the advanced Fungoni and Tajiri projects. Fungoni is set to be Nyati’s first mine development, followed by Tajiri, for which the Environmental Certificate was secured last month.

Strandline in March started updating the Fungoni project financial evaluation, which will incorporate the latest financial information on the project, including updated mineral sands price forecasts, which have increased substantially in recent years.

Strandline previously signed a $26-million project finance facility agreement with Nedbank CIB for the development of Fungoni, accounting for a significant portion of Fungoni’s $35-million capital requirement. The Nedbank facility is also under review to incorporate the requirements of the Nyati JV and complete the remaining due diligence and credit approvals.

Strandline said that proceeds from the capital raise would enable the company to advance front-end engineering design, finalise financing and progress long-lead procurement, contracts, offtakes and early construction work.

In late 2020, Strandline announced the results of the engineering scoping study on the titanium-dominated Tajiri project, which highlighted that Tajiri would deliver strong financial returns over a 23-year life, underpinning Strandline’s multi-decade production outlook in Tanzania.

In March, Strandline received the Environmental Certificate for Tajiri, which is a key pre-requisite for the granting of a special mining licence (SML) and will remain valid for the project life.

Strandline noted that proceeds from the capital raise would enable Strandline to progress the next phase of Tajiri project evaluation, and implement planning and permitting, with the priority shifting to approval of the SML application.

Earlier this week, Strandline announced that it had initiated a scoping study to evaluate the potential to increase the planned production rate by up to 50% at its 100%-owned Coburn minerals sands project in Western Australia.

The potential production increase will be aimed at enabling Coburn to capitalise further on its world-class resource, long mine life, high mineral sands prices and strong demand for offtake among leading customers in the US, Europe and China.

Any future expansion of Coburn will be undertaken once commissioning and steady state production is successfully achieved and the expansion works is expected to be funded from project cashflow. The expansion will leverage significantly off Coburn’s infrastructure, especially the inherent design capacity within the processing plant circuitry

Preliminary investigations highlight the potential compelling capital and operating cost efficiencies of scaling up the project, further enhancing Coburn’s already strong competitive position.

Construction at Coburn is over 65% complete and the project is on-budget and on-schedule to achieve first production of heavy mineral concentrate in the December quarter, 2022.

Coburn has an initial mine life of 22.5-years based on the current Joint Ore Reserves Committee-compliant ore reserves, with the potential to extend this beyond 2060 by converting mineral resources which exist adjacent and immediately north and along strike of the existing ore reserves.

The potential expansion of Coburn will be considered in conjunction with Strandline’s other strategic growth projects in Tanzania.

Edited by Creamer Media Reporter

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