Botswana: LionOre Secures Funds for Tati Nickel Project
LionOre has selected Rand Merchant Bank (RMB) as the sole underwriter for a non-recourse nine and a half year US $250 million (P1.5 billion) project funding package for the Tati Nickel Activox and DMS Projects in Botswana.
In a press release on its website Lion Ore revealed that the remaining funding required, which is around US $370 million (P 2.222 billion) will be provided by cash currently on hand at Tati Nickel – approximately US $100 million (P600 million) and from cash generated by Tati Nickel’s existing operations during the construction phase.
Public and Corporate Manager of Tati Nickel Thuso Dikgaka confirmed to Mmegi that the fund had been approved and the clearing of four square kilometres of land along the Matsiloje road where the plant is going to be constructed is underway. The Activox project is going to be operated under Botswana Metal Refinery (BMR) and some senior management members have already been appointed. It is expected that around 3,500 jobs will be created through contractors who will construct the plant.
On securing the project funding for Activox, Colin Steyn, President and CEO of LionOre is quoted as saying, “The ability of the Activox project to raise this significant amount of debt at extremely attractive terms clearly reflects the confidence and robustness of the project as we now enter the next phase of the commercialisation of the Activox technology”.
It also noted that LionOre received detailed term sheets from a number of leading international financial institutions and following an adjudication process, RMB was selected as the sole underwriter based on an analysis of the terms and conditions offered by all of the interested parties.
RMB is the investment banking arm of FirstRand Bank Limited, one of South Africa’s largest financial services groups with a market capitalisation of US $18 billion. RMB has a long relationship with LionOre and Tati Nickel, having funded the construction of the Tati concentrator in 2002 and the Activox demonstration plant in 2004.
RMB has received credit approval for the provision of the funding which is subject to the completion of final legal documentation and the fulfilment of certain conditions typical for funding of this nature. Completion of this documentation is expected in the first quarter of 2007.
LionOre stated that to provide certainty of future operating cash flow after the contribution of the US $370 million, RMB required Tati Nickel to enter into limited hedging arrangements comprising approximately 35 percent of its nickel production over a two-year period. These should also refer to 50 percent of its copper production over a two-year period and a lesser proportion of its anticipated copper production in the subsequent year.
Activox is a proprietary hydrometallurgical process developed by LionOre to treat a wide variety of metal sulfide concentrates. The core of the Activox process is the combination of ultra fine grinding (UFG) and pressure oxidation. The ultra fine grinding of nickel sulphide concentrates activates the sulphide minerals such that the mild temperature and pressure Activox leach extracts nickel, copper and cobalt from host sulfide minerals to solution where nickel can be concentrated and made into nickel metal using conventional process technologies. The
Activox facility is expected to increase Tati Nickel production to 22,500 tonnes from the current 14,000 tonnes per annum. Currently the concentrate from Tati Nickel mines is trucked to the BCL smelter in Selebi Phikwe where nickel matte is produced and then the matte is then shipped to Norway for refining.
Both Tati Nickel operations at the Selkirk underground and Phoenix mines are located 30km east of Francistown. In September 2005, LionOre announced approval of the expansion program for the processing facility at Tati Nickel. The project, which was named Project 5 million was divided into two phases.
The objective of Project 5 million, which was completed in 2006, was to increase annual production from 12,500 tonnes to 14,500 tonnes of payable nickel per annum. Phase one of the Project 5 Million involved general upgrade of the primary, secondary and tertiary crusher to give an overall throughput of 260 tonnes per hour.
Phase 2 of Project 5 million involves the construction of 12.5mtpa DMS plant at an estimated cost of P451 million. Construction of the second plant started in August 2006 and the plant is scheduled for commissioning in December 2007. The projected mine life is 11 years, which could grow to over 20 years if the Selkirk resource is incorporated into the plan after a pre-feasibility study.
Copyright © 2006 Mmegi/The Reporter. All rights reserved.
