this is looking very good. Finance for construction will see a re-rating and i reckon takeover target. Just imo.
GLTA
MZI Resources secures landowner consent for Keysbrook mineral sands Friday, April 05, 2013 by Angela Kean
MZI Resources (ASX: MZI) has marked another important milestone on the road to development of its flagship Keysbrook Mineral Sands Project in Western Australia’s southwest having now secured the remaining landowner agreements.
The agreements, which have been made with three landowners, give MZI the right to access and mine minerals on the properties involved.
The completion of these agreements moves MZI closer to finalising its financing arrangements for Keysbrook, including the debt facilities currently being negotiated with two leading banks.
This puts MZI on track to start construction of Keysbrook in the current quarter, with first production set for the March quarter of 2014.
Trevor Matthews, chief executive officer, told Proactive Investors today MZI's expectations were that it would likely secure finance for Keysbrook around mid-April.
“This project has a short construction period compared with most resource projects.
“With the key agreements either finalised or very close to completion, Keysbrook is now only about a year away from generating substantial cashflow for the company and its shareholders.”
Matthews said MZI is currently in negotiations regarding the construction contract.
"I think that we’re certainly expecting we’ll be putting early orders in and getting ready to start site works next month, about middle of the quarter."
One property is where the concentrator, site access road and associated infrastructure will be located.
Combined with existing landowner agreements and company owned property, the Ore Reserve life of the project is now supported by access and mining rights under the landowner agreements.
These landowner agreements come hot on the heels of news that MZI has gained a key approval to negotiate a port services agreement with the Bunbury Port Authority.
MZI is confident of finalising a services agreement with the BPA and expects this to be completed in the near future.
The company plans to export all of Keysbrook’s average annual production of around 91,000 tonnes of leucoxene and zircon concentrate products through the port to key Chinese and world markets.
Analysis
Locking in the remaining landowner agreements required to begin development of the Keysbrook mineral sands project moves MZI closer to finalising its financing arrangements for the project.
The project is only about a year from generating substantial cashflow, with strong economics underpinning Keysbrook.
The project has a mine life of +15 years, an Internal Rate of Return of about 71%, a payback period of less than 15 months and an average cash margin for the first three years of 65%.
Construction is penned in for the current quarter, meaning MZI will be well advanced on the road to production and first cashflows.
MZI also has advanced draft offtake agreements with prospective customers for its L70 and zircon concentrate products and is actively negotiating with a number of companies with respect to its premium L88 product.
Major titanium dioxide pigment producers, industrial product manufacturers and mineral sands processors have all shown a keen interest in the suite of products available.
The next key catalyst will be the securing of financing for the project. With this in hand, we expect the re-rating of the stock as the project is progressively de-risked.
MZI is well funded with around A$5.6 million in cash at the end of the December quarter 2012.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.
MZI Price at posting:
2.2¢ Sentiment: Buy Disclosure: Held
