MZI Resources (ASX: MZI) will commence engineering and purchase...

MZI Resources (ASX: MZI) will commence engineering and purchase of equipment immediately for its Keysbrook Mineral Sands Project with drawdown of funding, that could see first production in the December 2015 quarter.

The company is one of few in recent times to have secured project financing, resulting from the very robust project economics at Keysbrook - located 70 kilometres south of Perth.

This month it executed finance agreements totalling US$110 million (A$126.3 million) for Keysbrook Minerals Sands Project in Western Australia following Foreign Investment Review Board for the debt and equity funding package and shareholder approval for the Resource Capital Fund VI funding.

Compelling economics

The project hosts a high margin, long life reserve that will employ a low CAPEX and draw upon a well developed local infrastructure and use of simple and low risk processing technology.

Ore mining rate is set at 4.5 million tonnes per year to an average depth of 2.2 metres and no strip ratio for very low cost open pit mining.

Annual EBITDA has a base case of $44 million per year that is derived from a low OPEX of $331 per product tonne.

MZI Chairman, Mal Randall said that today marked a major turning point for MZI and its strategy to become a leading mineral sands producer.

“Having satisfied all conditions precedent to access corporate and project level funding, MZI has now commenced to draw down funds, and will be providing commencement notices to contractors and other stakeholders.

“This marks an exciting point in what has been a long process, and I would like to thank all our shareholders and staff for the support they have provided the company that has enabled it to reach this point.

“The support from our major funding partners and customers reaffirms our belief in this project and we look forward to maintaining a long and successful relationship with them,” said Randall.

The project’s development period is 12 months with first production planned for the December quarter of 2015.

MZI’s Chief Executive Officer Trevor Matthews said: “Mobilisation to site will start early next year with preliminary works entailing further detailed engineering and equipment procurement to commence immediately.”

“The decision to proceed with the Keysbrook Project reflects the commitment and hard work undertaken by the MZI team in meeting all the conditions for funding during very challenging market conditions. The fact that we are now commencing development is testament to the quality of the project and we look forward to building MZI into a significant mineral sands producer,” added Matthews.