MZI Resources (ASX:MZI) is on track to start mineral sands production at its Keysbrook Mineral Sands Project in Western Australia with GR Engineering Services (ASX:GNG) mobilising to site and commencing construction activities.
The Keysbrook Project is currently on budget and on schedule.
The first phase of work will focus on the access road into the plant site followed by the commencement of earthworks.
Following this stage is the construction of the heavy minerals concentrator and associated infrastructure which is due to be complete and in production during the December quarter this year.
In addition, GR Engineering have mobilised its construction team to the Picton plant site owned by Doral Mineral Sands Pty Ltd to commence the expansion and upgrade of the Doral mineral separation plant.
Recruitment activities have commenced for the operations roles of maintenance coordinator and health, safety and environment advisor with further positions to be advertised within the next few months.
It is expected that most operations staff will have commenced employment by early July 2015.
New employees will undergo extensive safety and skills-based training prior to mining and commissioning activities.
"The mobilisation of construction contractors to the Keysbrook mine and Doral site is a significant step in the development of the Project," managing director Trevor Matthews said.
"Our teams are now focussed on development, targeting commissioning and first production in the December 2015 quarter."
Keysbrook Mineral Sands Project
The Keysbrook Mineral Sands Project is forecast to produce on average, 96,000 tonnes per annum of mineral sands products comprising:
- 28,800 tpa (dry) of L70;
- 38,400 tpa (dry) of L88; and
- 29,000 tpa (dry) of zircon concentrate.
Heavy mineral concentrate will be trucked about 120 kilometres to Doral Mineral Sands' mineral separation plant, which is just 10 kilometres from the Bunbury Port, for toll treatment.
Keysbrook has a high value JORC ore reserve of 26 million tonnes with in-situ THM of 670,000 tonnes grading 27.8% L70 (70% titanium dioxide), 46.6% L88 (88% titanium dioxide), 14.6% Zircon, and 11% other minerals.
The project hosts a high margin, long life reserve that will employ a very low CAPEX and draw upon a very well developed local infrastructure that is very conversant with processing mineral sands and use of simple and low risk processing technology.
Ore mining rate is set at 4.5 million tonnes per year to an average depth of 2.2 metres and no strip ratio for very low cost open pit mining.
Annual EBITDA has a base case of $44 million per year that is derived from a low OPEX of $331 per product tonne. The project is funded with a development cost of $69.6 million and pre-operations cost of $6.2 million.
About 85% of the project's annual production by volume has been sold under long term contracts.
MZI has recently started exploration drilling at the Keysbrook West prospect that has the potential to increase resources beyond the existing 78.9 million tonnes and could extend the life of the project.
The combined exploration and grade control program comprises 864 holes and has an expected duration of 8 weeks.
Drilling at Keysbrook West is proposed with sufficient drilling density to allow declaration of a Resource should significant mineralisation be intercepted
The company had previously completed a series of auger holes to a depth of one metre that identified clear extensions to the Keysbrook mineralisation with the majority of auger holes ending in mineralisation.
A single composite assay was generated from this work, which returned an assay value of 1.6% total heavy minerals.
This grade is indicative only, with previous drill results from the Keysbrook Resource indicating grade increases with depth.
Historical data revealed reconnaissance drilling across the recently granted E70/4628.
The three most significant intercepts are:
- 8 metres at 3.1% THM from 1 metre in HD510;
- 7 metres at 2.4% THM from 1 metre in HD511; and
- 6 metres at 2.3% THM from 0 metres in HD502.
Reconnaissance field traverses on E70/4628 by the MZI team confirmed the presence of heavy mineral near surface in panned concentrates.
An exploration target of between 20 million to 120 million tonnes grading 1% to 2.3% THM has been defined.
The pace is picking up for MZI Resources with the mobilisation of construction contractors to the Keysbrook mine and Doral site.
It is now focused on development with commissioning and first production on track to start in the December Quarter 2015. Cashflows will follow soon with first year EBITDA forecast at $52 million.
Keysbrook is funded with a development cost of $69.6 million and pre-operations cost of $6.2 million.
Share price kickers include the securing of a long term contract for the remaining 15% of forecast production and drilling results.
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