Kenmare Resources, which has a primary listing on the LSE and a secondary listing on the Irish Stock Exchange, has announced the results of the Definitive Feasibility Study (DFS) for the relocation of its Wet Concentrator Plant (WCP) B to the Pilivili ore zone at its Moma Titanium Minerals Mine in northern Mozambique.
With the DFS confirming the technical and economic feasibility of relocating WCP B to Pilivili, the project – with a capital cost of US$106 million – has been approved by Kenmare’s board.
The Moma mine showing WCP B (photo: Kenmare).
“The results of the DFS confirm our plans for relocating WCP B to Pilivili. Kenmare is on track to deliver a 20 % increase in production at Moma on a sustainable basis from 2021 and the move of WCP B to Pilivili will be the final step in achieving this goal,” comments Michael Carvill, Kenmare’s MD. “Earlier this month (June) we received the first of two environmental permits required for the relocation and we expect to receive the second in Q3 2019, with the construction of the purpose-built road commencing immediately thereafter. I look forward to providing further updates on our progress with this growth project during the coming 18 months.”
Kenmare previously announced three development projects that together have the objective of increasing production to 1,2 Mt/a of ilmenite (plus co-products) on a sustainable basis from 2021. The first development project, the 20 % capacity expansion of WCP B, was commissioned by the end of 2018, on time and at a cost of more than 25 % below budget. The second development project, the construction of WCP C, is well underway, with commissioning scheduled for Q4-2019. The third project is the relocation of WCP B to Pilivili, which is planned to be completed by the end of 2020. This final project targets increased total production by accessing higher grade ore in the Pilivili ore zone.
WCP B began mining the Namalope ore zone in 2013 and it is expected to complete the current mine path in Q3-2020. All ore zones within the Moma portfolio were considered for the relocation of WCP B but Pilivili was selected due to the favourable combination of higher grades, strong co-product credits and free flowing sand with low slimes, enabling ease of mining and processing. Additionally, Pilivili is located 23 km from Namalope and the existing Mineral Separation Plant (MSP), allowing for ease of heavy mineral concentrate (HMC) transportation by pipeline.
The Pilivili ore zone has the highest grades within Moma’s portfolio, with mineral reserves of 220 Mt averaging 4,4 % Total Heavy Mineral (THM). The life of mine average grade mined by WCP B at Pilivili is expected to be 4,6 % THM and in the first four years of production the average grade mined is expected to be 5,3 % THM.
Due to these higher grades, production from Pilivili is expected to increase overall HMC production by an average of 130 000 t/a, contributing to a total of 1,2 Mt/a of ilmenite production (plus co-products) from 2021. Additionally, Pilivili’s mineral reserves have higher zircon and rutile co-product credits than Namalope (with 0,25 % zircon and 0,08 % rutile in ore), which are expected to contribute to lower cash operating costs per tonne of ilmenite.
As a result of the relocation, Kenmare expects production from WCP B to be suspended for up to 12 weeks, from the completion of mining at Namalope to the start of commissioning at Pilivili. Additional mining areas have been identified for WCP B at Namalope to ensure that production is maintained, in the event of delays to the project execution schedule.
Pilivili has a mine life of eight years, after which WCP B will mine its way to the adjacent ore zones of Mualadi and Nataka. Consequently, Kenmare believes that the relocation of WCP B from Namalope to Pilivili will be the only move of this kind that is necessary during WCP B’s economic life.
The DFS was completed by Hatch Africa, a specialist EPCM consulting firm with strong experience in mineral sands, and overseen by Kenmare’s project development team. It included an independent peer review process.
A number of different methods of relocating WCP B to Pilivili were considered, including disassembly/reassembly and alternate transportation options for the assembled plant by road and/or sea. Moving the assembled plant by road has the lowest risk profile, and accordingly Kenmare will appoint a specialist heavy lifting and transport contractor to relocate WCP B and its dredge by road.
The contractor will use self-propelled modular transporters (SPMTs) to transport WCP B out of its mining pond at Namalope, along a purpose-built road, including a causeway estuary crossing into the new mining pond at Pilivili. This is the same method that was used to transport the recently completed WCP C dredge in the Netherlands.
The total capital cost estimate for the relocation of WCP B to Pilivili is, as mentioned, US$106 million, including a US$15 million contingency. Kenmare intends to fund the total capital cost from its balance sheet and internally generated cash flow.
The most significant infrastructure requirement for the relocation is the construction of the purpose-built road for the transportation of WCP B and its dredge. The road will be 23 km in length and 66 m wide, and construction is expected to take approximately eight months from Q3-2019. HMC produced at Pilivili will be transported to the MSP using a 16 km overland pipeline and positive displacement pumping system. Electrical power at Pilivili will be provided by a new 16 km, 110 kV power line adjacent to the purpose-built road, supported by a static synchronous compensator to improve reliability.
Additional annual operating costs of up to US$5 million are expected for the WCP B operation at Pilivili, primarily due to the increased cost of transporting HMC from Pilivili to the MSP. However these overall increased operating costs are expected to be more than off-set by the additional production due to the higher grades at Pilivili, which will lead to a decrease in unit operating costs. Kenmare is targeting cash operating costs per tonne of US$120-130 (in 2018 real terms) from 2021.
