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Chromex Mining plc (AIM: CHX) is an AIM quoted dedicated chrome company established to acquire, control and develop chromite mining and processing facilities. It currently has two key mining assets located on the Bushveld Complex in South Africa, which between them have total resources of approximately 41 million tonnes of chromite. Chromex is focused on growing its current resource base with near production projects to supply beneficiated chrome products into the ferrochrome and stainless steel markets. In addition the Company continues to review additional prospects.
Chromex to restart mining operations at Stellite Mine in December, shares jump
Investors reacted warmly to an update from South Africa focused chromite produce, Chromex Mining (AIM: CHX)(‘Chromex’), which reported today that it was continuing to generate positive cash flow and announced the acquisition of additional chrome assets in Zimbabwe.
Chromex Mining is a rare animal on the Alternative Investment Market (AIM) - a pure chrome play in South Africa’s Bushveld. South Africa accounts for 40% of world production of chromite – the only ore from which chromium is extracted commercially - and hosts around 70% of the current chromite resource base. The Bushveld igneous complex – although better known perhaps for its deposits of platinum group metals – contains a number of chromite bearing reefs or layers.
Demand for chrome – for which there is as yet no commercially viable substitute - is largely driven by producers of ferrochrome for stainless steel production worldwide, who consume some 90% of mine output. Other industrial uses include superalloys, leather tanning, castings and metal finishing.
Chromex’s two properties lie on each limb of the Bushveld: Mecklenburg in the east and Stellite in the west. Both are owned and operated by the South African company Chromex Mining Company (Pty) Ltd, which is 74% owned by Chromex and 26% owned by their Black Economic Empowerment (BEE) partner Umnotho WeSizwe.
At Stellite, Chromex confirmed that its recently completed chrome beneficiation plant was able to operate at full design capacity in November, producing 42% and 44% metallurgical grade chrome concentrate. Chromex is feeding the plant from existing stockpiles at Stellite, but mining operations are expected to recommence in December due to “on-going demand”. Chromex also confirmed that it is finalising the design and costing of adding a dense media circuit to double beneficiation capacity. “Importantly, in addition to the capacity increase, Chromex will be in a position to market a sized lumpy chrome product in addition to the chemical and metallurgical grade concentrates that it currently produces,” the company noted.
Chromex did concede that 2009 was a “difficult year for the South African chrome industry”, due to a combination of a higher rand, an uncertain marco-economic backdrop, and increasing costs and power constraints. Despite the significant headwinds, Chromex reaffirmed its commitment to invest in upgrading its beneficiation facilities and strategy to produce enough chrome to maintain positive cash flow.
Meanwhile, an ongoing challenge to the company’s mining right at Mecklenburg continues to be unresolved. Chromex said the delay in a resolution was due to delays in the process of providing evidence to the court. “Chromex has complied with all requirements within the stipulated time scales, and, on the basis of our legal advice, the company remains confident of a successful outcome.”
In the same statement, Chromex also announced its first foray into Zimbabwe. It said it has concluded a binding Heads of Agreement to acquire 49% of Falvect Mining for a nominal consideration.
Under the terms of the deal, Chromex will have the exclusive right to co-develop all Falvect chrome concessions in the Shurugwi region and tribute agreements in the Ngezi area, and market 100% of
the chrome products produced from those operations.
In return, Chromex will provide working capital into Falvect and funding for the development of current projects, and any additional acquisitions in Zimbabwe.
Chromex added that it was investigating the possibility of setting up beneficiation operations in Zimbabwe.
"The investment in Falvect is in line with our strategy of building a broad portfolio of chrome and related mineral assets across southern Africa,” Chromex CEO Russell Lamming said. “The timing of the acquisition is linked to the lifting of the Zimbabwean ban on exports of chrome ore and fines, effective 1 November 2009 and will hopefully allow us to expand our production capabilities going forward.”
Shares in Chromex jumped 17% on the update.
