Tanzanian Mineral Sands Projects (Nyati mineral sands)
- Strandline holds 2,000km2 of highly-prospective tenure along the coast of Tanzania
- Strategically positioned within one of the world’s major zircon and titanium producing corridors (see Figure 1)
- Over 40% of global mineral sands production is from Africa
- Strandline has a product quality advantage with high-value zircon, rutile and ilmenite deposits
- Tanzania is a mature mining jurisdiction, strong regulatory system, with existing coastal infrastructure to support mine development and mineral exports
Strandline has recognised that there is a large gap in HMS resources between the countries of Mozambique and Kenya where several large to very large mines and resources have been previously discovered and developed. Strandline was first to move and pegged what it considered to be the best mineral sands ground in Tanzania close to infrastructure.
Strandline owns multiple mineral sands growth assets along the highly prospective coastline of Tanzania. During the quarter, the Company announced a pivotal Framework Agreement (FWA) with the Government of the Republic of Tanzania which paves the way for establishment of a world-class mineral sands business along the coastline of Tanzania.
The FWA outlines the key joint venture ownership and operating terms for the development of the advanced Fungoni project near the port of Dar es Salaam and the Company’s other emerging Tanzanian mineral sands assets, including the titanium-dominated, large-scale Tajiri project.
Strandline will own 84% of the newly formed joint venture company, Nyati Mineral Sands Limited (Nyati), with the Government acquiring a 16% non-dilutable free carried interest.
Nyati will produce critical minerals of zircon, titanium, and monazite containing rare earths, as well as garnet concentrates. With falling global supply of mineral sands and increasing commodity prices, Strandline-Nyati’s growth pipeline leaves it well placed to capitalise on this opportunity.
The fiscal regime associated with the joint venture is in accordance with Tanzanian law and remains unchanged from the assumptions contained in the Fungoni and Tajiri studies previously released. This includes a royalty rate of 3% of project revenues, corporate income tax rate of 30% on taxable profits, capital depreciation on a five-year straight-line basis (20% each year) and withholding tax on interest and dividends of 10%.
Strandline, in collaboration with the Government, is now advance it’s project development strategy and working to finalise the administrative establishment of Nyati, which includes assigning Strandline’s project assets, licences and permits into Nyati from Strandline’s other Tanzanian subsidiaries.
The Fungoni and Tajiri projects are forecast to generate a total of more than US$1 billion of EBITDA over ~30 years based on published Production Targets (or A$1.43 billion at AUD: USD 0.70).
The Company, through rapid systematic exploration, has been hugely successful in discovering multiple major mineral deposits, that are at various stages of project development, including:
- Fungoni Project: 25km south-east of Dar es Salaam with DFS completed and ready for development
- Tanga South Project: comprising the Tajiri JORC resources and prospective Pangani tenements, 40km south of the Tanga port in Northern Tanzania. New Sakura discovery (September 2019) awaiting laboratory results.
- Bagamoyo Project: 40km north of Dar es Salaam, where a large-scale discovery shows significant resource potential from surface
- Sudi Project: in southern Tanzanian 30km from the port of Mtwara, where mineral sands intersection of 30 meters thick provide a strong target for resource growth.
With the 2015 acquisition of Jacana Resources, Strandline controls a highly prospective exploration tenure position along the coast of Tanzania, within a major world class mineral sands corridor (see Figure 2). These projects are surrounded by some of the world’s major world-class mineral sands mines, located in neighbouring Kenya, Mozambique, Madagascar and South Africa (see Figure 1).
- A series of 100% held projects spread along 350km of the Tanzanian coastline
- Exclusive access to only detailed country-wide mineral sands database & specialist team
- Focus on High Value Mineral Assemblages – proven through drilling of key projects to date
- Rapid, low cost delineation of JORC resources – two high grade Resources already delineated at Fungoni and Tajiri prospects
- Major infrastructure advantage with Key Projects close to infrastructure hubs of port and power
- Envious position for majors wanting entry into the last underexplored piece of southeast African coastline assemblages (Ilmenite, Rutile, Zircon) close to infrastructure that have potential to be rapidly brought into production.
FUNGONI PROJECT – Poised for development
Fungoni is Strandline’s 100%-owned, high-margin “starter” project in Tanzania, situated 25km from the port of Dar es Salaam in a growing commercial/industrial district and will benefit from existing infrastructure in the region. Development of Fungoni will pave the way for a succession of major mineral sands projects along the coastline of Tanzania, as well as establish a new industry in Tanzania.
The Fungoni project is based on a capital efficient and proven execution strategy, with a fixed price EPC contract secured with international contractor, GR Engineering Services, that underpins a 12-month build phase to first production.
The 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.
Pivotal Framework Agreement has been executed between Strandline and the Government of Tanzania, which is designed to unlock the immense value of Strandline’s Tanzanian mineral sands high-growth portfolio. Strandline will own 84% of the newly formed joint venture company, Nyati Mineral Sands Limited (Nyati), with the Government acquiring a 16% non-dilutable free carried interest.
Following an extensive due diligence process, Nedbank CIB has obtained credit approval to underwrite Fungoni’s debt funding:
- Nedbank CIB has signed a Credit-Approved Term Sheet to underwrite a US$26 million Project Finance Facility (the “Facility”) to part fund the development of the Fungoni Project in Tanzania (refer ASX release dated 6 April 2020);
- Fungoni has an estimated capital cost of US$35 million (excluding financing costs), meaning the Facility will meet most of the project’s capital requirement;
- The Facility contains standard commercial terms which the Company considers favourable;
- Fungoni is a highly robust project that is projected to generate strong financial returns for Strandline based on low capital and operating costs and a high-value product suite;
- Nedbank CIB has extensive experience in mining project financing in Africa;
- During 2019 Nedbank conducted detailed due diligence of technical, financial, market, legal, environmental and social fundamentals and has since progressed compilation of documentation for the Facility;
- The Facility remains subject to finalisation of conditions precedent to Financial Close and first draw down. This includes finalising the additional finance documents with Nedbank, obtaining the remaining government-related approvals (including completing documentation for the Tanzanian Government’s 16% free-carried interest in the project company, compensation and resettlement agreements and access arrangements in relation to the project site), as well as satisfying the equity shortfall;
- In view of the current evolving COVID-19 pandemic, the parties will also continue to evaluate the potential impact of the pandemic on the project fundamentals. The outcome of this evaluation will lead into Strandline and Nedbank’s final investment/credit decision to proceed with the construction of the project prior to Financial Close.
Key terms for the Facility are described in Schedule 1.
- With key mining and environment licences in place, the DFS completed, offtake contracts secured for 100% of forecast product revenue, major construction contracts executed and the Nedbank debt Facility Agreement now signed, Strandline remains on track to develop its first project in Tanzania and capitalise on the forecasted strong mineral sands market.
- The Fungoni DFS demonstrates strong financial metrics including:
- 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 highlights of the Fungoni DFS include (Refer to the ASX Announcement dated 06 October 2017 for full details of the material assumptions underpinning the production target and financial results for the Fungoni Project):
- High Grade Mineral Resource: Measured and Indicated – 22Mt @ 2.8% THM
- 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
- Ore Reserve underpins an initial 6.2 years of operations at a planned 2Mtpa mining rate
- Orebody at surface, free-dig unconsolidated sands well suited to conventional open pit dry mining using excavator and truck; resulting in low operating costs
- Environmental Certificate and Mining Licence Application granted. The Tanzanian Government’s decision also paves the way for Strandline to advance its other Tanzanian mineral sands projects, which are globally-significant in scale and valuable mineral
- 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.
TANGA SOUTH PROJECT:
Click on the Information Memorandum link to view the full updated Engineering Scoping Study which was released on 7 October 2020.
- The Sakura discovery comprises extensive mineralisation from surface along strike from Tajiri. (see ASX release dated 25 September 2019).
- Samples visually indicate higher-grade strands within a broad halo of mineral sands anomaly spanning ~5km x 0.5 to 1km.
BAGAMOYO PROJECT – Strong drilling results highlight growing potential of Bagamoyo mineral sands project
The Bagamoyo tenements are located approximately 40km north of Dar es Salaam and close to the proposed Bagamoyo port development in Tanzania. Strong assays received from the maiden drilling program during the September 2018 Quarter confirm Bagamoyo as a major mineral sands discovery.
Bagamoyo is emerging as a significant new Tanzanian mineral sands province following strong assays from maiden auger drilling program.
Auger holes completed over soil, radiometric and topographic anomalies confirm a series of higher grade zones from surface; Remaining open at depth.
- More outstanding assays with high grades of zircon and titanium from the Bagamoyo Project in central Tanzania , see ASX release dated 17 September 2018.
- Assay results, which come from air core (AC) and infill auger drilling, confirm extensive high-grade mineralisation from surface, with thickness of 3m to 10.5m
- Significant drill results include:
- 7m @ 5.6% total heavy mineral (THM) and 18% slimes from surface (Auger)
- 5m @ 5.6% THM and 8% slimes from surface (Auger)
- 7m @ 4.7% THM and 10% slimes from surface – ended in mineralisation (Auger)
- 10.5m @ 4.4% THM and 9% slimes from surface (AC)
- 7.5m @ 3.9% THM and 20% slimes from surface (AC)
- Mineral assemblage test work from composite samples confirm a high unit-value assemblage for the upper zone of BG-2, averaging 8.2% zircon, 5.7% rutile, 0.5% leucoxene and 67% Ilmenite
- The BG-2 anomaly has received relatively wide spaced AC drilling along its 4.5km length, and remains open across and along the strike, which confirms the potential scale of the system. The drilling of additional auger holes into the BG-4 anomaly has established the potential for north-west trending high-grade strands parallel to the current coast.
- In light of these results, the Company has estimated an Exploration Target comprising 78 to 156Mt at 3% to 4.5% THM. A further drill program is required to test the veracity of the Exploration Target
- The Company believes the Bagamoyo area is highly prospective and represents a significant new mineral sands province in Tanzania.
- Bagamoyo is on track to be one of four major mineral sands projects we aim to evaluate and potentially develop in Tanzania over time.
- Minor field activity was performed during March quarter 2020 and a further drill program is required to test the veracity of the Exploration Target.
Summary of Drill Results
The Company completed the AC and Auger drill programs in early in 2018 and recently received the final laboratory assay analysis data relating to THM, mineral assemblage and chemistry testwork.
The shallow auger drill program was completed across BG-2 and BG-4 using ~50m drill centres along variably spaced drill lines which confirmed the cross-strike continuity of the high-grade zones.
The 19 hole, 373 drill metre AC program was designed to test the thickness of mineralisation across the large BG-2 anomaly. The program identified higher-grade zones ranging from 3m to 10.5m thick from surface, with a cross-strike width ranging between 100 to 250m, which is encouraging. The BG-2 drill holes were planned on an irregular pattern with wide spaced drill lines varying between from 400 to 800m apart and 200m spaced holes along the 4,500m long BG-2 mineralised trend. No AC was completed at BG-4.
The AC drill program also confirms broad, high background heavy mineral content averaging approximately 1.5% THM that contains several high-grade strandlines with THM grades ranging between 4% and 6% THM.
Mineral assemblage data has been received from 15 heavy mineral concentrate composites selected across geologic domains from the auger and AC drill programs The result show a high-value average assemblage, comprising 6.4% zircon, 4.6% rutile, 0.7% leucoxene and 60% Ilmenite with combined rutile and zircon of 11.1%.
The mineral assemblage from across all of the zones and grade ranges at BG-2 comprises 7.4% zircon, 5.2% rutile, 0.5% leucoxene and 63% ilmenite. Five representative upper zone from BG-2 have a combined zircon-rutile content of 14.4% comprising 8.2% zircon and 5.7% rutile with a total VHM of 82%. The mineral assemblage from BG-4 comprises 5.5% zircon, 3.9% rutile, 0.8% leucoxene and 57% ilmenite across a range of THM grades.
BAGAMOYO MAIDEN EXPLORATION TARGET
With the completion of the auger and AC drilling program, the Company has been able to estimate a maiden Exploration Target for the anomalies at Bagamoyo. The Exploration Target is an estimate of potential heavy mineral sands tonnage where there has been insufficient exploration for Mineral Resource Estimation.
The Company has now defined an Exploration Target of 78 to 156Mt at 3% to 4.5% THM.
The Exploration Target has been determined based on the following:
- AC and auger drill database for width, depth and grade ranges at a number of localities along and adjacent to the main anomalies;
- Topographic features using a detailed digital terrain model generated from the detailed (100m flight line and 30m sensor height) aeromagnetic survey; and
- Geological model with the recent drilling showing grade and geological continuity.
The following assumptions have been used to estimate the Exploration Target:
- Bulk density value of 1.8g/cm³ has been used for the Exploration Target;
- The width of mineralisation is based on drilling across the BG-2 and BG-4 anomalies and is considered conservative with exploration drilling indicating the mineralisation has not been closed off;
- Grade ranges used for the Exploration Target are based on the averaged grades achieved using a lower and upper cut-off grade across the datasets, which is considered appropriate at this level of exploration; and
- Thickness ranges used for the Exploration Target are based on downhole thickness that are thought to represent true thickness of the various grade mineral envelopes showing reasonable geological and grade continuity.
The surface expression of the Exploration Target was generated in GIS software integrating the above datasets. The surface areas were calculated for each zone and multiplied by the average bulk density. The outlines were then multiplied by the depth ranges as defined by auger and AC drilling in the various zones. The results are presented in Table 1 and the locations and data distribution is presented in Figure 2 and a cross-section in Figure 3.
Table 1 Maiden Exploration Target for the Bagamoyo Project
||Lower Thickness (m)
||Upper Thickness (m)
||Lower Tonnage (Mt)
||Upper Tonnage (Mt)
|BG2 - a
|BG2 - b
|BG4 - a
|BG4 - b
The drill programs performed to date have been highly effective in terms of mineral sands discovery and enhancing the Company’s understanding of the Bagamoyo anomalies. In light of these assay results and the large-scale Exploration Target, the Company will continue to define the prospects over time, with the aim to delineate Mineral Resources suitable for project feasibility assessment.
SOUTHERN EXPLORATION REGION:
SUDI PROJECT – Assays reveal thick intervals of heavy mineral sands along the 8km anomaly defined at Sudi
The Sudi Project is located in the southern region of Tanzania.
Exploration activities to date have outlined minerals sands anomalies with elevated grades and high-value assemblage from surface with the next phase of drilling to commence across priority targets at Sudi and other areas of interest in Southern Tanzania (see ASX release dated 14 March 2018).
- Strandline has discovered significant mineral sands with the first phase of air core drilling at the Sudi Project in Southern Tanzania
- The drilling has outlined mineral sands anomalies with indications of high-value assemblage along 8km of strike
- Assays reveal thick intervals of Total Heavy Mineral (THM) from surface. Significant results include:
- 25.5m @ 3.4% THM, including 12m @ 4.1% THM from surface (17SDAC5030)
- 9m @ 3.8% THM from surface (17SDAC5326)
- 9m @ 3.4% THM from surface (17SDAC5006)
- 10.5m @ 3.0% THM from surface (17SDAC5093)
- 7.5m @ 3.1% THM from surface (17SDAC5327)
- 6m @ 3.1% THM from 6m (17SDAC5020).
- 6m @ 3.9% THM from 16.5m (17SDAC5348)
- Mineral assemblage test work from composite samples confirms a high unit value assemblage averaging 12% zircon, 5% rutile and 66% ilmenite; one composite sample contained 17% zircon