In addition to attending the 2014 Investing in African Mining Indaba, Australia-based mineral sands company Mineral Commodities (MRC) will host a private function for government officials, investors and the press on February 5, concurrently with the Mining Indaba, to discuss developments at the company’s new Tormin mineral sands mine, CEO Andrew Lashbrooke tells Mining Weekly.

The mine is located about 400 km north of Cape Town, on South Africa’s West Coast, and has active beach deposits of heavy minerals zircon, rutile and ilmenite, used in the manufacturing of ceramics and in the production of paint, paper and plastic.

Lashbrooke adds that MRC has positioned itself for significant growth in South Africa’s junior mining sector and tells Mining Weekly that the project is “on track”, having started full production in December.

Moreover, he emphasises that, since starting development and construction of the project in April 2013, Tormin remained within budget.

“From a shareholder’s perspective, the project is fully funded, with secured offtake agreements in place. In terms of current production and commodity prices, Tormin will have paid back the investment by the end of June 2014,” says Lashbrooke, who adds that there are very few mining projects in the world that can confidently make these types of claims.

Further, he explains that the Tormin project has achieved several milestones that have positively contributed to its overall success.

Offtake Agreements

In June 2013, MRC concluded a prefinance and marketing agreement with metals and minerals trader Wogen Pacific, which stipulates that Wogen Pacific will receive 100% of Tormin mine’s nonmagnetic concentrate, primarily comprising zircon and rutile.

“This agreement provides MRC with significant working capital for and access to the full mineral sands value chain without having to invest in our own dry-processing facilities,” Lashbrooke points out.

At the time of going to print, MRC was negotiating with potential offtake partners with regard to other minerals that will be produced at Tormin mine, with the primary focus on ilmenite.

“Negotiations have developed significantly and the company hopes to be in a position to complete a product offtake agreement by February 2014,” says Lashbrooke.

Fully Funded Operation

When committing to the development of Tormin mine in July 2012, MRC estimated that the initial cost of constructing the project would total A$16-million, which Lashbrooke notes was inclusive of a 10% contingency factor.

“All major contracts awarded to contractors for the Tormin project either met or improved on budget expectations. Having raised A$14.5-million as part of a capital raising in late 2012, there was a shortfall that needed to be bridged. MRC successfully secured a $2-million prefinance debt facility with its offtake partner, Wogen Pacific, in July 2013.

“However, a further injection of funds was deemed prudent to ensure that sufficient working-capital headroom was maintained during the commissioning and ramp-up stage of the project. Consequently, MRC launched a one-for-four underwritten rights issue in September 2013,” indicates Lashbrooke.

The rights issue was oversubscribed, with the company ultimately raising a gross figure of A$6.5-million through the issuing of 81-million new shares at A$0.08 apiece.

“This ensured that the Tormin project was fully funded and had sufficient headroom to manage any unforeseen eventualities,” he asserts.

Resource Enhancement

The Tormin mine has an expected life-of-mine of up to five years, although Lashbrooke says MRC is confident that the offshore area, which is the source of the minerals and for which MRC was awarded the prospecting rights in November 2012, will replenish the beach and extend the mine’s life by at least another five years, he adds.

Further, Lashbrooke cites a 1995 thesis, titled ‘The Geelwal Karoo heavy mineral deposit a modern-day beach placer’, by the Stellenbosch University Geology Department’s William MacDonald and Abraham Rozendaal, which stated: “The locally high, total heavy mineral content and the favourable ore-to-gangue mineral ratio, coupled with the possibility of replenishment-style mining, make this (the offshore area) an attractive resource.”

Innovation-Driven Results and Simplified Processing

Lashbrooke says Tormin mine comprises two skid-mounted primary beach concentrators (PBCs), which will each treat 125 t/h and for which the feed rates are planned at 1.18 t/y run-of-mine.

“The PBCs will reject most of the silica and nonvaluable heavy media on the beach and produce a primary concentrate of 500 kt/y, recovering more than 95% of the zircon and rutile.”

Further, he points out that the secondary concentrator plant will process the 500 kt/y of primary concentrate, producing 48 kt/y of nonmagnetic concentrate, about 125 kt/y of ilmenite concentrate and 134 kt/y of garnet concentrate.

The garnet concentrate will be sold to local manufacturer and granular abrasive commodities distributor Blastrite, adds Lashbrooke.

“The nonmagnetic concentrate, grading 81% zircon and 11.6% rutile, will be bagged on site, prior to dispatch, in accordance with the Wogen Pacific offtake,” he explains.

He adds that the ilmenite will require additional processing through a dry plant, which will require a second level of investment.

Contribution to Transformation

Lashbrooke tells Mining Weekly that historical inequalities have caught the South African mining sector between the seemingly “disparate poles of financial performance and societal transformation”.

MRC concluded that these objectives were not necessarily mutually exclusive and has, therefore, started to make a positive contribution to one of South Africa’s poorest communities.

“We have provided a structural loan to our Tormin black economic-empowerment (BEE) partner, Blue Bantry, which holds a 50% share of the mine. This will help the company facilitate community projects in the Xolobeni community, which is located about 300 km north of East London, in the Eastern Cape, and one of the poorest in South Africa. Projects currently under way include the establishment of chicken farms, the delivery of food parcels to the poor, the upgrade of clinics and roads, as well as the provision of school uniforms, books, facilities, bursaries and learnerships for schoolgoers,” states Lashbrooke.

Further, the company has created 65 jobs through the construction and development phase of Tormin mine.

Lashbrooke says that 100 full-time jobs will be created in the operational phase, of which the vast majority have been allocated to members of the local community near the Tormin mine.

He stresses that preferential procurement opportunities have been a priority for MRC, as more than 90% of the project’s capital expenditure (capex) has been spent in South Africa, with more than 40% of that spent in the immediate project area.

Lashbrooke points out that project- specific opportunities, totalling almost 20% of the project’s total capex, have also been allocated to historically disadvantaged South African (HDSA) entrepreneurs.

“All of this has been achieved while still enabling the Tormin project to be completed on time and without a lost-time injury on site,” says Lashbrooke, adding that recruitment, training and development programmes have ensured that more than 80% of the workforce and more than 50% of management positions will be held by HDSAs from the start of the project.

MRC at the Indaba

Lashbrooke tells Mining Weekly that the Investing in African Mining Indaba, which will be taking place at the Cape Town International Convention Centre from February 3 to 6, is a unique space for emerging miners to network within the global mining investor sphere and to promote investment in new mining projects.

He points out that the Mining Indaba is the world’s largest mining investment event, which has been classified as the largest gathering of mining’s most influential stakeholders and decision-makers with vested interests in African mining.