Fungoni Mineral Sands Project, Tanzania
The zircon-rich Fungoni Project is the Company’s most advanced Tanzanian based development, with a full DFS recently completed, product offtakes secured and final project approvals progressing.
The updated Fungoni DFS confirms the project will deliver strong financial returns, has a high unit value product suite, is capital-efficient and demonstrates the strategic potential of the Company’s portfolio of mineral sands assets in Tanzania.
The project is favourably located ~25km from the Dar es Salaam port in a growing commercial/industrial district and will benefit from existing infrastructure in the region.
In June 2019, Nedbank CIB signed a Credit-Approved Term Sheet to underwrite a US$26 million Project Finance Facility to part fund the development of the Fungoni Project in Tanzania.
Key highlights include:
- An estimated capital cost of US$35 million (excluding financing costs), including mine infrastructure, port facilities, working capital, land access, pre-production mining, owner’s costs and project contingencies of 10%;
- Maiden ore reserve of 12.3 Mt @ 3.9% Total Heavy Mineral (THM), with opportunities to grow reserves and mine life, further increasing financial returns;
- Project pre-tax NPV10 of US$48.7m (A$64.9m at USD:AUD 0.75, up from US$42.9m)
- Project post-tax NPV8 of US$34.8m (A$46.4m) and NPV10 of US$30.8m (A$41.1m)
- Project pre-tax IRR of 61% (up from 56%) and project post-tax IRR of 42%
- Project-only cashflows would support a payback period from first production of 1.7 years
- Life-of-Mine (LOM) Revenue of US$184m (up from US$168m) - LOM EBITDA of US$115m (up from US$98m)
- Binding offtake agreements secured covering 100% of Fungoni production and revenue
- Fixed-price EPC contract awarded; equivalent development capital US$32m (up from US$30m) (excluding applicable taxes and levies)
- Key mining and environment licences already in place, strong government support and EPC contract executed
- Nominal 12 month design, construction and commissioning period and 2.7 year payback period from start of construction;
- Modular relocatable infrastructure with state-of-the-art processing technology which can be re-used at Strandline’s other mineral sands assets in Tanzania;
- “Low impact” mining philosophy with progressive backfill and rehabilitation of the mined area; returning the land to pre-mining state; and
- Fungoni will generate a host of key social and economic benefits including capital inflows to Tanzania, significant job creation, training and job diversity, transferable skills development as well as community engagement programmes.
Coburn Mineral Sands Project, Western Australia
The Coburn Mineral Sands Project is a large zircon and titanium rich deposit, located 240km north of the major minerals port of Geraldton in Western Australia. The project has key project approvals already in place, including mining and environmental approvals and native title heritage agreements.
The Commonwealth Government’s Northern Australia Infrastructure Facility (NAIF) has completed its Strategic Assessment of Strandline’s Coburn Mineral Sands Project in WA in October 2019. NAIF will now proceed to the detailed due diligence phase of the NAIF assessment process. Funding from NAIF would significantly boost Coburn’s ability to attract the remaining project funding on competitive terms .
The results of the revised DFS were released on 16 April 2019 to redefine the technical and commercial aspects of the project. Key highlights are:
- Strong financial returns with a Pre-Tax NPV of A$551m (USD:AUD 0.72, 8% discount rate) and an Internal Rate of Return of 32%;
- Large Ore Reserve of 523Mt @ 1.11% Total Heavy Mineral (THM) underpins an initial mine life of 22.5 years at the planned mining rate of 23.4Mtpa;
- Life of Mine (LOM) revenue of A$3.9b and LOM EBITDA of A$1.9b, with a revenue-to-operating cost ratio of 2.2, based on TZMI’s Feburary-2019 commodity price forecast;
- Key project approvals already in place (environmental, native title, heritage and mining), making Coburn construction-ready pending finalisation of project financing;
- Nominal 18-month design and construct duration to achieve first ore to process facilities;
- Located in the Tier-1 mining jurisdiction of Western Australia, close to key infrastructure and the dominant mineral sands market of Asia;
- Engagement with global consumers confirms high demand for Coburn’s products in both concentrate and final product form, providing a wide range of offtake and investment options;
- Coburn can deliver both a high-value Heavy Mineral Concentrate product (HMC Case) or can be refined further to final products (Final Products Case);
- Development capital of A$207m for HMC Case, with an additional A$50m required for Final Products Case which includes MSP infrastructure.
Tanga South (Tajiri) Mineral Sands Project
The Tajiri deposits are situated in northern Tanzania near the Port City of Tanga, some 35km to the north. The 100%-owned tenements comprise a series of higher-grade mineral sand deposits along a 30km mineralised corridor, including the T1, T2, T3, T4, TC, Tajiri North and Vumbi deposits.
Mineralisation at Tajiri starts at surface, with no overburden and contains large coherent higher-grade domains comprising mostly high-value titanium-dominated mineral assemblage, with elevated zones of zircon and occasionally almandine garnet.
Tajiri hosts a world-scale JORC-compliant Mineral Resource Estimate of 268Mt @ 3.3% THM, with a contained Heavy Mineral (HM) content of 8.8Mt, including in-situ rutile (580,000t), zircon (335,000t), ilmenite (5,206,000t) and almandine garnet (1,477,000t).
Results received from Resource expansion drilling in 2019 continue to highlight strong potential for large increase in the JORC Resource of 147Mt at 3.1% Total Heavy Mineral (THM).
Several resource zones (Tajiri TC, T3 and Vumbi) remain open along or across strike providing significant opportunities to grow resources further over time. The mineralisation also shows strong geological and grade continuity along and across strike, which bodes well for future feasibility and development activities.
Tajiri has the geological critical mass, robustness and market appeal to advance project feasibility, and underpins Strandline’s outstanding long-term production outlook in Tanzania. For more information on the Tajiri project refer to ASX Announcement 9 July 2019.
A new discovery, September 2019 (Sakura Prospect) provides further evidence that Strandline’s 100%-owned Tajiri project is a world-class mineral sands deposit. The Sakura discovery comprises extensive mineralisation from surface along strike from Tajiri. Samples visually indicate higher-grade strands within a broad halo of mineral sands anomaly spanning ~5km x 0.5 to 1km. Sakura discovery has potential to add significant tonnes to the already-large Tajiri Resource.% Total Heavy Mineral (THM). Laboratory tests are currently being evaluated. Tajiri is Strandline’s second major mineral sands project in Tanzania behind the ‘developmentready’ Fungoni Project, where project financing is advancing
Pipeline of Growth Projects, Tanzania
To complement Fungoni, Tajiri and Coburn projects, the Company has also made some significant mineral sands discoveries at the Bagamoyo and Sudi Projects in Tanzania, adding to the portfolio value.
The Sudi project is located some 30km by sealed road to Mtwara port and forms part of a JV with Rio Tinto, who are sole funding exploration in Southern Tanzania. Sample testwork confirms Sudi has a high unit value assemblage averaging 11.5% zircon, 4.7% rutile and 64.4% ilmenite; one composite contained 17.8% zircon. Next on the agenda is a resource drilling campaign to define to the extents of the mineralisation.
Strandline’s 100%-owned Bagamoyo tenements are located approximately 40km north of Dar es Salaam and close to the proposed Bagamoyo port development in Tanzania. In early 2017 the Company undertook a widespread soil sample program over prospective radiometric and topographic features which identified significant areas of higher grade mineralisation. The Company then followed up with a reconnaissance auger drill program designed to rapidly assess the potential thickness of sand across priority targets and also verify the high-grade results generated from the soil sampling program.
Laboratory THM analysis results from this auger program reaffirmed the highly prospective nature of the Bagamoyo region. The results show widespread heavy mineral sand enrichment over the various soil anomalies BG-2, BG-3, BG-4 and BG-5, with multiple holes showing higher grade THM at depth. Bagamoyo is emerging as a significant new Tanzanian mineral sands province and the Company will continue to perform exploration and evaluations to define the deposits.