Tiomin eyes $3m for Kwale

Tiomin Resources (TIO-T) has inked a deal paving the way for Harris Partners to use their best efforts to raise up to $3 million via a private placement of up to 15 million units.

Each unit, comprising one share plus half a share purchase warrant, will be priced at 20. One full warrant allows the holder to acquire one Tiomin share for 30 for 18 months following the deal’s closing or 45 days after Tiomin informs the warrant holders that it has been issued a mining licence for the Kwale project, whichever comes first.

The financing is subject to regulatory approval.

Tiomin plans to use the proceeds to advance its Kwale titanium-sands project, southwest of Mombasa, Kenya. Earlier this summer, the government of Kenya granted the project an environmental licence following a 2-year review of the company’s environmental impact study. The government also gave the go-ahead for a proposed port facility at Shimoni.

Tiomin still has to negotiate a mining lease and other permits before construction can begin. As well, it must devise a plan to resettle residents of two towns in the permit area.

Kwale hosts a resource of 200 million tonnes of mineral sands grading 2% ilmenite, 0.5% rutile and 0.3% zircon. Tiomin’s plan calls for an open-pit mining operation capable of producing 300,000 tonnes ilmenite, 38,000 tonnes zircon and 75,000 tonnes rutile annually for six years. The total mine life is pegged at 13 years.

In the long term, Tiomin intends to develop two other large titanium-bearing mineral sands deposits in Kenya, namely Kilifi and Mambrui. Extensive mineralization has also been identified on the Vipingo exploration licence.

Kwale has long been the target of protests by environmental groups who criticized the company’s environmental impact study and commissioned one of their own, which concluded the project could end up destroying surface and groundwater flow patterns and possibly contaminate a major aquifer.

In late March, a lawsuit launched by three local landowners in Kenya against the company’s local subsidiary was dismissed. The suit sought to prevent development of the project.

Tiomin has 58.7 million shares issued and outstanding. The shares have recently been trading in the 20 range, at the lower end of their 5-78, 52-week range on the Toronto Stock Exchange.