Mineral sands focused MZI Resources (ASX: MZI) has consolidated its already strong cash position with a US$6 million mineral sands shipment - which is the fourth and final shipment from Lethbridge South mineral sands project on Tiwi Islands.
The sale of around 8,100 tonnes of Heavy Mineral Concentrate from Lethbridge South was made to China's largest mineral sands processor, Tricoastal Minerals (Holdings) Company Limited, with MZI Resources to receive 90% of the sales proceeds early next week.
The balance will be adjusted in accordance with assay results and will be received after the product has been shipped to Xiamen Port in China.
MZI Resources already held $5.6 million in cash at the end of December 2012, with the latest boost to the balance sheet coming as the company prepares to finalise the debt funding to develop its flagship Keysbrook mineral sands project in Western Australia.
The Keysbrook project, located 70 kilometres from Perth, is an advanced zircon / leucoxene rich mineral sands project. It has been granted all environmental, development and extractive industry licence approvals from the relevant statutory authorities and Shires.
The commissioning of Keysbrook is expected in the December quarter of 2013, and importantly for MZI Resources two leading banks are currently undertaking due diligence on Keysbrook - with the debt arrangements scheduled to be completed next month.
This schedule will place the company on track to begin construction in the March 2013 quarter, and then the commissioning of Keysbrook is expected before the end of the year.
Opportunities for Tiwi Islands based project under review
MZI Resources said that the rehabilitation at Lethbridge South has commenced and senior staff employed for Lethbridge South have been retained to work on the Keysbrook project.
The company has delayed a decision on removing the camp and concentrator at Lethbridge South until it completes a review of possible new small mining opportunities in the Tiwi Islands.
Development approvals are currently progressing with planning for further exploration activities and early studies on its Kilimiraka mineral sands project on the Tiwi Islands.
The shipment adds a cash filip to MZI, for the flagship Keysbrook project which is on schedule for construction start in late March. Debt funding is being finalised to develop Keysbrook mineral sands project.
With two leading banks currently undertaking due diligence on Keysbrook the debt arrangements are likely to scheduled to be completed next month. This would place MZI on track to start construction later this quarter.
Proactive Investors can see catalysts for the current share price of $0.026. We also believe the retracement in market valuation has been overdone. On our calculation, we estimate a worth of $0.035-$0.04 for MZI. On this basis the stock remains undervalued.