Tiomin gets the nod at Kwale

After years of review, Kenya’s Mining and Prospecting Licensing Committee has approved a 16-year Special Mining Lease for Tiomin Resources‘ (TIO-T) Kwale titanium-sands project, southwest of Mombasa.

The lease, which can be renewed for a further 10 years, gives Tiomin full, irrevocable, sole and exclusive right to mine and process Kwale’s heavy mineral sands.

The lease still has a final hurdle to clear and it may prove a tough one. Under Kenya Law, the approved lease must face a 90-day period of public scrutiny before it can be formally issued.

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 early 2002, 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 must also address the relocation of two towns with about 5,000 residents that stand in the way of the project’s development.

Meanwhile, Tiomin is continuing negotiations aimed at expanding the lease to cover 15% of mineralization found on the defunct Ramisi sugar cane plantation.

Last summer, the government of Kenya granted the project an environmental licence following a 2-year review of Tiomin’s environmental impact study. The government also gave the go-ahead for a proposed port facility at Shimoni.

At last count Kwale’s resource stood at 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.

While it awaits a formal lease, Tiomin plans to continue with detailed engineering and arranging long-term sales agreements to support project financing. The company is in the midst of discussions with engineering companies concerning the design and construction of the mine and mineral processing plant.

In late afternoon trade in Toronto on Dec. 16, Tiomin’s shares were a penny lower at 28.