Kalagadi Manganese said that it has reached significant milestones in the construction of its ZAR 7 billion mine and sinter plant development close to Hotazel in the Northern Cape, remaining on track to start production in June 2012.
With all development so far financed with shareholders' cash, executive chairwoman Ms Daphne Mashile Nkosi said that the group has sunk both the ventilation and main shafts of the mine down to the production level of around 280 million. The group envisages annual production of 3 million tonnes per year. She added that "What you see here has been funded from our own bank account."
According project manager Mr George Maluleke, around 52% of the sinter plant, which will process all of the mine's ore to a 48% manganese sinter product, has been completed. The plant is due for cold commissioning in March, with a nameplate capacity of 2.4 million tonnes output per year.
Mashile Nkosi said that the group has a signed agreement with Transnet Freight Rail to transport its total sinter output to Coega in the Eastern Cape, already valid from January 2012. This would tie in with the stated intentions of TFR CEO Mr Siyabonga Gama to have all the Northern Cape's manganese production railed to the Ngqura port at Coega, as opposed to Saldanha in the Western Cape.
Ms Mashile Nkosi said that the development of the third component of the Kalagadi Manganese project, a 700,000 tonnes per year ferro manganese smelter at Coega, would start as soon as Kalagadi’s financing deals have been finalised.
The smelter, to be built at a cost of ZAR 4.2, would give the total project a price tag of ZAR 11.2 billion, of which 40% has been funded by shareholders' contributions. The remaining 60% are funded by development financing institutions and commercial banks. Ms Mashile Nkosi said the company has already agreed to a common term sheet with all the lenders, and expects the loans to be finalised by end October.
That would signal not only the go ahead for the construction of the smelter, but also a 23 kilometers railway line connecting the sinter plant site with the Hotazel to Port Elizabeth manganese line.
While Kalagadi has already secured a 50% off take agreement for both the ferromanganese and remaining sinter product with ArcelorMittal (the international group; not the South Africa subsidiary), Ms Mashile Nkosi said it would pursue other off take opportunities to minimise the group’s exposure to the spot market.
Asked whether the significant amount of new manganese supply from South Africa might cause an overhang in the world market, Ms Mashile Nkosi said Kalagadi had an edge given that it would sell beneficiated products, and not unprocessed ore.
She said that "There wouldn't have been a business if we didn't beneficiate. Just for selling sinter in 2012 we'll be looking at a turnover of ZAR 7 billion, followed the next year by between ZAR 12 billion and ZAR 13 billion."
(Sourced from www.miningmx.com)
