MZI Resources (ASX: MZI) has reached a key milestone in developing its flagship Keysbrook mineral sands project in Western Australia with the appointment of GR Engineering Services (ASX: GNG) as its preferred engineering, procurement and construction contractor.
The work to be undertaken by GR Engineering currently has an agreed fixed price, lump-sum EPC cost of $54.6 million.
The appointment follows a competitive process in which a number of construction contractors submitted proposals to construct and commission the Keysbrook concentrator and associated facilities and the modifications to the nearby mineral separation plant owned by fellow mineral sands group Doral, which is toll-treating Keysbrook concentrate.
MZI and GR Engineering will now work towards finalising an EPC contract. This will be done in parallel with negotiations to complete the financing process.
Keysbrook Mineral Sands Project
The Keysbrook Project promises to transform MZI into a substantial mineral sands producer with strong cashflow and a pipeline of growth projects.
The Keysbrook Project will produce an average 91,000 tonnes per annum of mineral sands products from 110,000 tonnes of dry heavy mineral concentrate. This comprises:
- 26,000 tonnes per annum (dry) of leucoxene 70% titanium dioxide;
- 36,200 tpa (dry) of leucoxene 88% titanium dioxide (L88); and
- 28,700 tpa (dry) of zircon concentrate.
Heavy mineral concentrate will be trucked about 120 kilometres to Doral’s mineral separation plant, which is just 10 kilometres from the Bunbury Port, for toll treatment.
Keysbrook has total development costs of A$64.3 million and is expected to have LOM average operating costs of A$34.1 million per annum, or A$379 per tonne of product.
It has total Proved and Probable Ore Reserves of 26 million tonnes grading 2.6% for in situ total heavy minerals of 670,000 tonnes. This is sufficient for a mine life of 5.5 years.
Potential exists to extend mine life to more than 15 years.
The appointment of an EPC contractor takes MZI a step closer towards developing the Keysbrook Project.
Talks are currently underway with several leading mining finance banks to provide debt financing for the project, which is expected to be secured in the near term given the scale of work done to date and a recently completed due diligence exercise.
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