AMN - TANZANIA: Funds see Panda Hill through to mine decision

Cradle Resources has secured commitments to raise A$2.16 million via a placement to sophisticated investors. This ensures Cradle is sufficiently funded to meet its likely working capital requirements until the Panda Hill project secures expected debt and equity funding and a decision to mine.

A financing mandate has recently been executed by Panda Hill Tanzania Ltd(the project joint venture company, owned 50% by Cradle) with a leading European bank and discussions concerning debt financing and offtake agreements for the project are ongoing and advanced.

The recent Definitive Feasibility Study (DFS) for the project demonstrated that it is highly economic, with an IRR of 32% (pre-tax). The project is estimated to generate EBITDA averaging $112 million/year over its 30 year mine life, at a cash margin of 49%, and with an initial capital outlay of $196 million.

Cradle’s DFS, which supersedes the prefeasibility study, is based on the company’s revised development concept which considers a plant throughput of 1.3 million tonnes/year from an open-pit operation with the option to double to 2.6 million tonnes/year after the fourth year of production. That is based on a mineable resource of 72.4 million tonnes at 0.54% Nb2O5, for a ~30-year life-of-mine and calculates an unfunded NPV8 of $542 million and IRR of 27% at an average niobium (Nb) price of $42/kg.

Mirabaud notes: “In our view the staged approach is the preferable option mainly due to the benefits of a gradual entry into the highly concentrated niobium market.

“The DFS, which shows a quick route to production, more than justifies our faith in the robust nature of the project and enhances our confidence that Cradle will be capable of securing funding (~$100 million) to develop Panda Hill thus becoming the first primary niobium producer to come on stream since 1976, in a market dominated by only three players (CBMM, Niobec and Catalao).

“Global demand for niobium is expected to grow at a minimum annual rate of 3% over the next five years, as a result of both a growth in niobium’s intensity and of increasing demand for steel from emerging nations, niobium’s market main driver.”

The Panda Hill project is in the Mbeya District in southwest Tanzania, approximately 650km west of the capital Dar es Salaam. The industrial city of Mbeya is only 26km from the project area and has a population of approximately 280,000. The project is close to highly developed surrounding infrastructure including the TAZARA rail line (2km away), the Dar es Salaam–Tunduma Highway (5km away), the SongweAirport (8km away) as well as the major power infrastructure in Mbeya.

www.cradleresources.com.au

News courtesy of International Mining