IM Mineral Sands News in Brief: May 2015

By Kasia Patel
Published: Monday, 11 May 2015

Strandline to focus on defining newly purchased Jacana Minerals resource; Production difficulties force Mineral Commodities Ltd to terminate marketing agreement with Wogen; Murray Zircon signs MoU with Image Resources for project development.

Strandline Resources, which in April signed a binding heads of agreement to acquire a subsidiary of Tanzanian-focused mineral sands explorer Jacana Minerals, has said it will prioritise exploration of Jacana’s project driven by the requirement to define the resource as soon as possible and located the highest grade mineralisation.

The purchase of the Jacana, should it go ahead, represents the missing gaps for Strandline in Tanzania, the company’s managing director, Richard Hill, said in an interview.

ASX-listed Strandline already owns an exploration project in Tanzania, at which it confirmed high quality test results for zircon and total heavy minerals (THM) following drilling at its Madimba and Madimba East prospects in March.

According to Hill, the projects acquired from Jacana demonstrate similar properties, adding that "in the current climate of cyclically low mineral sands prices, assemblages containing high percentages of zircon and rutile are crucial as their current pricing in generally a factor of 10 higher than ilmenite".

The shareholder meeting to approve the acquisition will be held on 24 June, with the settlement expected to take place on 26 June.

South Australian producer Murray Zircon Pty Ltd has signed an MoU with Image Resources Ltd to assess a transaction whereby Murray Zircon would receive up to 47% of Image shares in exchange for the provision of its ore processing equipment, infrastructure operational expertise and senior management personnel.

The agreement was made to enable Image to rapidly advance the development of its flagship mineral sands deposits in the North Perth Basin, Western Australia (WA).

Image plans to initially produce high-grade mineral sands from its 100%-owned Boonanarring and Atlas projects, for which a feasibility study was completed in 2013.

The deposits have a probable ore reserve of 24m tonnes grading 8.2% heavy minerals (HM) at 2.5% HM cut-off containing 15% zircon. Capex for the mine, expected to have a 10-year life, are estimated at Australian dollar (A$) 64m, with a construction time of 18 months.

South African mineral sands producer Mineral Commodities Ltd (MRC) has issued Wogen Pacific Ltd with a notice of suspension under the companies’ pre-finance and marketing agreement dated 31 July 2013, informing Wogen of an MRC material adverse event.

The notice constitutes an MRC termination event, which gives it the right to suspend obligations to sell mineral sands products to Wogen.

The notice was given owing to disputed moisture and quality claims, toll treatment standards, pricing of final product and payment delays, which have had an adverse effect on sales. Under the terms of the agreement, Wogen managed the conversion and sale to its end user customers of non-magnetic heavy mineral concentrate produced by MRC.

"The suspension does not in any way affect the company’s ability to sell garnet pursuant to the separate offtake agreement or ilmenite, however it cannot sell any non-magnetic heavy mineral concentrate directly to any end-use customers of Wogen," MRC outlined.