MAC: Mines and Communities

Kenya: beached project is rescued by Chinese concern

Published by MAC on 2009-09-14

Over the past two years, China's leading nickel producer, Jinchuan, has been buying into one of Africa's least sustainable mineral projects.

Since 1995, Canada's Tiomin has been determined to scoop millions of tonnes of titanium-bearing sands from agricultural and grazing land along the east coast of Kenya. However, the company has been stymied by a heavy debt burden, and western banks weren't inclined to bail it out.

When two editors of the MAC website visited the area in June this year, the project seemed to be "dead in the water" - with only a few caretakers guarding the decrepit test site.

But, two weeks ago, Jinchuan announced that it will take full control over the project, and pay off Tiomin's debt.

This could mark the beginning of a massive dredging operation, stretching for many miles.

Jinchuan Group to acquire controlling stake in Kwale project

Interfax Metals and Mining

4 September 2009

Jinchuan Group Ltd., China's largest nickel producer, has signed an investment agreement with Tiomin Resources Inc. to acquire a controlling stake in its wholly-owned Kwale Mineral Sands project in Kenya, the Toronto Stock Exchange-listed Canadian miner announced on Aug. 31.

The agreement is based on the same terms as a memorandum of understanding signed between the two companies in July 2008. According to the agreement, Jinchuan Group will acquire a 70 percent interest in Tiomin Resources' subsidiary Tiomin Kenya Ltd., which owns 100 percent of the Kwale project, by committing to invest $25 million for project development, and to develop and to operate the project.

Tiomin Resources will hold the remaining 30 percent stake after the transaction. The Canadian miner said that all net cash flow generated by the Kwale project will be used initially to repay the project's debt, and the company will inject no further investment into the project.

The transaction, which is still subject to regulatory and shareholder approval, is expected to be completed within two months.

The Kwale project, located approximately 40 kilometers south of Mombasa, the largest port city in eastern Africa, contains 38.9 million tons of proven heavy metal ore reserves, including titanium and zircon, grading 7.1 percent, as well as 78 million tons of probable ore reserves. The project is designed to produce 330,000 tons of ilmenite, 75,000 tons of rutile, and 40,000 tons of zircon per annum.

Jinchuan Group specializes in the mining, smelting, refining and chemical engineering of nickel, copper, cobalt, precious metals and nonferrous metals. The company's output of nickel and platinum group metals each account for over 90 percent of China's total annual production.

Jinchuan Group currently holds an 18.52 percent stake in Tiomin Resources.

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