A US$41.5 million funding package outlined in early October will allow MZI Resources to develop its Keysbrook mineral sands project in WA.
International private equity fund Resource Capital Fund (RCF) is expected to provide the equity/mezzanine finance portion of the Keysbrook funding and pave the way for MZI to complete the debt funding agreement with two Joint Lead Arranger banks.
With the funding secured, MZI would be in the position to begin construction of the project late this year, with the intention of reaching first production by the December quarter of 2014.
The Keysbrook project, 70km from Perth, is expected to produce 91,000 tonnes per annum of product from 110,000t of dry heavy mineral concentrate (HMC).
Keysbrook has an unusual heavy mineral makeup compared to other titanium and zircon operations in WA’s South West, as leucoxene is its major constituent.
Once producing, Keysbrook would be one of the largest leucoxene mines in the world.
Heavy mineral concentrate product from the site would be transported via the South West Highway to Doral’s mineral separation plant in Picton for dry separation. MZI had entered an agreement with Doral to toll treat the concentrate and a plant upgrade was planned to enable treatment of the high leucoxene Keysbrook HMC.
“The funding package is the outcome of extensive due diligence conducted by RCF since it became a cornerstone investor in MZI,” MZI chief executive Trevor Matthews said.
“RCF’s support is a testament to the attractiveness of the project.”
The funding package comprises consideration for the purchase of 2 per cent of the gross royalty revenue on all minerals produced from an area including the Keysbrook project, equivalent to US$3.5 million; a US$21 million convertible loan facility; and a US$17 million Bridge Finance Facility split into two tranches.
“This package provides the equity/mezzanine funding and, when combined with the debt funding currently being finalised with the JLA banks, is expected to provide all the funds required to develop the Keysbrook project,” Mr Matthews said.
“This package gives us confidence that the project financing process will be completed shortly which, following completion of certain financing conditions, will enable us to commence development activities at Keysbrook.
“I am also very pleased with the continuing relationship with RCF, one of our largest shareholders and now significant project development funding provider.”