Cove Resources (ASX: CVE) has acquired the advanced stage Koivu Titanium Project in Finland for a total consideration of €9 million (A$11.2 million) plus a 2% net smelter royalty.
The deal could see Cove Resources into production at the project by 2015.
The acquisition is subject to due diligence. Finland is often a country of choice for mining operations due to its stability and near zero sovereign risk.
The impact of the acquisition is company making for Cove, as the project has already chalked up a JORC Resource, conclude a Scoping Study in two weeks and commence a Bankable Feasibility Study to produce an initial 20 year/250,000 tonnes of titanium pigment concentrate.
Cove could become an international supplier of high quality titanium pigment feedstock to European plants with significant freight advantages into the European market.
Koivu hosts five titanium deposits with a combined JORC Indicated and Inferred Resources of 68.7 million tonnes at 7.5% titanium dioxide (TiO2), which equates to over 5 million tonnes of contained TiO2.
Woth noting is also the potential to expand the titanium resource through drilling as the current JORC compliant ore bodies remain open at depth. The Pera Lyly and Riutta deposits also provide options to increase the resources by proceeding to JORC estimates.
Cove has entered into a Sale and Purchase Agreement with Endomines AB (publ), Sweden, to acquire Kalvinit Oy, which is the company that owns the Koivu Titanium Project. The right to enter into the Sale and Purchase Agreement was acquired from Delta Minerals, a private company based in the UAE, through a nomination agreement.
Production of a high quality titanium feedstock
Cove will target the local Finnish and European markets to sell the produced high quality titanium feedstock, which is used in the manufacture of titanium dioxide, which is widely used in paint, plastic, paper and cosmetics industries.
Due diligence
Cove will have the right to conduct a Bankable Feasibility Study on the project until 15 April 2013, at which point Cove is to confirm whether it wishes to proceed with completion of the acquisition with Endomines AB (publ).
On due diligence, Cove has already started to re-optimise and validate the resources and conduct an updated Scoping Study, after which it is envisaged that a Bankable Feasibility Study will be initiated immediately for an initial 20 year mining operation.
Output would start at 250,000 tonnes per annum of titanium pigment concentrate and over 50,000 tonnes of magnetite and phosphorus. The 20 year mine life requires only 32 million tonnes to be extracted from the Resource of 68.7 million tonnes.
Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.