Thursday, August 14, 2008

China's Jinchuan to pay $25m for controlling stake in Kenya mineral sands project

29th July 2008

Chinese resources group Jinchuan has agreed buy a 70% holding in TSX-listed Tiomin Resources' Kwale mineral sands project, in Kenya, in exchange for investing $25-million in the asset, the companies announced on Tuesday.

The mine, once in operation, is expected to produce an average of 330 000 t/y of titanium-bearing ilmenite, 77 000 t/y of rutile and 37 000 t/y of zircon.

Under the terms of a memorandum of understanding between Tiomin and Jinchuan, Jinchuan will provide or arrange all the neccessary financing, on normal commercial terms, to develop Kwale.

It will also be responsible for the construction, development of the Kwale project.

Although Kwale was financed and ready to start construction in 2006, Tiomin has been unable to finalise agreements with the Kenyan government, on issues such as taxes, tariffs and land access, which were required by the lenders.

“This transaction is extremely important for Tiomin and removes the cloud of uncertainty that has driven the shares to cash value,” said Tiomin president and CEO Robert Jackson.

The deal, which requires approval from shareholders in Jinchuan and Tiomin, as well as consent from Barrick Gold, whose subsidiary Pangea Goldfields has a right of first refusal on the Kwale property, is expected to close in November.