Reuters reported that Terramin Australia Limited is discussing supply offtake agreements with European smelting companies ahead of a decision whether to develop the giant Tala Hamza zinc and lead mine in Algeria, as other giant lodes run dry.

Mr Kevin Moriarty MD of Terramin said that a final economic feasibility study is due in the Q1 of 2010 that could lead to the mine being developed by late 2011 at twice its original size.

He said that doubling the annual yield from an initial projection to around 400,000 tonnes of zinc concentrate and 80,000 tonnes of lead concentrate would add about USD 134 million in development costs to the current USD 266 million price tag while providing greater economies of scale. More discussions were scheduled next month with smelting companies in Europe where the low iron bearing ore found at Tala Hamza was prized under tough environmental regulations imposed on smelting.

He added that "Tala Hamza's concentrates have very low iron and silica content, meaning it's low in residues and this is what European smelters require because they simply cannot dispose of residues."

Mr Moriarty expects the demand for the mine's ore will increase once Australia's Century zinc mine runs dry in 2014 halting a major source of low iron ore shipped to Europe.

He said that Terramin which has already secured AUD 46 million from investors in China and Europe and reached a 5 year lead and zinc concentrate supply pact with commodities trader Transamine may also seek funding within Algeria. We've been approached by a very large government-owned Algerian bank, which has instructions to fund developments in the region we are operating. They want to do a letter of intent to finance the project. If we get development away when we want to we will start production in late 2011 and ramping up over the following year.

(Sourced from Reuters)