Tiomin Resources has been notified by ATW Venture Corp that ATW will not execute the formal agreement to acquire an option to purchase up to a 50% interest in Tiomin’s Kenyan mineral sand projects. Nevertheless, Tiomin says it believes “in the unrecognized value of the Kwale project and will continue to review its strategic options regarding the potential future development of the project.
As reported in International Mining Project News (February 4) Tiomin had signed a letter of intent (LoI) with ATW providing for the grant to ATW of an option to acquire up to a 50% interest in Tiomin’s Kenyan mineral sands projects, including the Kwale project, for $35 million. Cost escalation for the development of the Kwale project was then projected at $16 million, which includes $12 million in capital expenditures and $4 million in foreign exchange.
The Kwale mineral sands project is located some 40 km south of the city of Mombasa, the largest port in East Africa, and 10 km inland from the Kenyan coastline. On December 12, 2006, Tiomin announced a delay in project construction as a result of the Government of Kenya not providing full access to the project site to initiate construction activities. Certain farmers had refused to be relocated.
The EPCM contract has been awarded to Ausenco International. Kwale project economics indicate production of some 330,000 t/y of ilmenite, 75,000 t/y of rutile and 40,000 t/y of zircon per year for the first six years of its projected 12-year mine life, generating an estimated annual pretax operating cash flow of approximately $40-50 million per year for the first six years. www.tiomin.com