J.C. Potvin’s
The deal falls under the terms of a loan-and-option agreement reached between the two companies in 1998 whereby Tiomin can repay a US$2.3-million loan from Aur by giving up its wholly owned Panamanian subsidiary, PanaCobre.
PanaCobre owns the rights to the Cerro Colorado project, which is 250 km west of Panama City and has lain dormant since Tiomin completed a feasibility study in 1998.
The Tiomin study envisaged the building of a US$200-million heap-leach operation that would gradually be replaced by a high-capacity conventional milling operation.
A long-time bridesmaid of the copper world, Cerro Colorado was first drilled in 1970 by Canadian Javelin, after which time it passed through a succession of hands: the Panamanian government, Texasgulf Sulphur, RTZ and eventually, in the mid-1990s, Tiomin.
Using a cutoff grade of 0.4%, undeveloped primary copper-sulphide resources are pegged at 1.75 billion tonnes grading 0.64% copper (or 25 billion lbs. contained copper) plus silver and molybdenum credits.
In disposing of PanaCobre, Tiomin writes-off a net $15 million on a consolidated financial basis.
Tiomin continues to focus on its Kwale titanium sands project in coastal Kenya, where there are resources of 200 million tonnes of sandy dunes grading 1.9% ilmenite, 0.5% rutile and 0.3% zircon.
The company has submitted a positive feasibility study on Kwale to the Kenyan government, as well as an environmental-impact assessment, prepared by South African-based Coastal Environmental Services, which recommends development.
Tiomin is awaiting mining and environmental licences. However, the project hit a snag in early March, when Kenya’s High Court issued a 14-day injunction restraining Tiomin from undertaking any mining activity or dealing with land in the Kwale district.
Tiomin says the granting of the injunction was based on a lawsuit filed by three private citizens of Kenya who allegedly represent squatters and landowners in the Kwale area.
The company believes the lawsuit is without merit and says it will “aggressively defend” its position.
A bankable feasibility study completed at Kwale last year indicates that mining could be carried over at least 14 years at an initial production rate of 300,000 tonnes ilmenite, 75,000 tonnes rutile and 37,000 tonnes zircon.
Capital costs are expected to be, at most, US$137 million.
In January, Tiomin filed a final prospectus for the sale of $5 million worth of special warrants priced at 85 each, with one special warrant entitling the holder to a single share.
Toronto-based Sprott Securities served as agent, pulling down a commission of $325,000 in cash plus 294,117 warrants exercisable into shares at 93.
The deal boosts Tiomin’s cash position to about $6 million, with most of the proceeds earmarked for work at Kwale, including pilot-plant tests, acquisition of additional surface rights and completion of engineering and design studies. Kwale is the most advanced of Tiomin’s four mineral-sands deposits in Kenya.
In other developments, Tiomin has acquired its fifth patent relating to the production of synthetic rutile. The process converts ilmenite into a high-grade titanium-dioxide feedstock widely used in manufacturing pigments.
Mineral-sands veteran Ian Schache has become Tiomin’s senior vice-president and chief operating officer.
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