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Mineral Commodities racks up $15m pile of cash

Mineral Commodities is sitting on US$15.7m cash from its profitable mineral sands mine in Africa as it looks to expand the mining footprint of its 50 per cent-owned Tormin mineral sands project in the Western Cape province of South Africa. The company recently commenced mining of the Western Strandline which boasts a JORC resource of 106 million tonnes grading 12.4 per cent total heavy minerals or “THM”.

The company said the maiden JORC resource from its Western Strandline deposit was remarkable in terms of both scale and grade, indicating that it could be a potential company making resource that sits right alongside its existing mining plant.

Production commenced at Tormin in 2013 and Mineral Commodities is currently processing around 2.4 million tonnes of mineral sands per annum, delivering 65,892 tonnes of THM concentrate during the quarter for a 34.3 per cent increase on the previous quarter.

The strong production rates come from the upgraded resource which now includes a doubling of the beach placer mineralisation and the colossal, conventional, onshore Western Strandline deposit that hosts zircon, garnet, ilmenite and rutile.

The new discovery delivers the company a tier one deposit that will underpin the expansion of the Tormin plant and its operation for many years to come. It also puts paid to the company’s most pressing issue – the provision of a decades-long mine life.

Mineral Commodities Executive Chairman, Mark Caruso, said the Tormin project had a limited mine life before the discovery of the Western Strandline. It is already processing THM from what is now a world-class asset and the company will be realising its potential for decades to come.

Mineral Commodities finished the quarter with US$15.7 million in cash after the settlement of a dispute with the GMA Garnet USA Corporation and its related entities.

Interestingly, the parties to the dispute agreed to enter into a new, non-exclusive offtake agreement commencing next year for the supply of 100,000 tonnes per annum of garnet concentrate for three years with automatic annual renewals thereafter, subject to a six-month termination clause.

Mineral Commodities is a diversified development and mining company with its mineral sand mining operations in South Africa augmented by graphite mining operations at Skaland in Norway and its high-grade Munglinup graphite deposit near Esperance in Western Australia that it is looking to get into production.

The Skaland operation is already the largest producer of crystalline graphite in Europe and the fourth-largest producer of the product in the world outside China. However, with the demand for battery-grade graphite set to skyrocket in Europe by 2023, the company is looking to pivot its finished product into battery-grade in due course.

Mineral Commodities recently tabled its pre-feasibility study for the mining and downstream processing of its graphite deposits and the manufacturing of active battery anode material for use in electric vehicle batteries, hoping to break into the Chinese battery manufacturing market monopoly.

The study includes the integration of the company’s existing graphite deposits in Norway and Australia with its production facility in Skaland, Norway and contemplates two alternative battery anode processing technologies with both producing numbers big enough to make the toughest analysts sit up and take notice.

The first showed an annual EBITDA of US$213m which equates to A$294m and the second showed an annual EBITDA of US$235m or A$324m at today’s exchange rate.

Importantly the PFS contemplates producing these numbers for at least 14 years which is the initial modelled mine life for the impressively high-grade Munglinup graphite deposit near Esperance in WA.

Mineral Commodities has also been quietly tying up a land-owner agreement over ground covering what it calls Norway’s largest known graphite anomaly at Skaland, known as the Bukken prospect.

Whilst the company is working hard on European graphite and showing the market that downstream processing can work, the Tormin mine in southern Africa will be the belle of the ball for the company for some time to come yet as the company continues to ratchet up its pile of cash.

Is your ASX listed company doing something interesting? Contact: matt.birney@wanews.com.au

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