South African chrome and platinum group metal (PGM) producer Tharisa Plc says it acquired a 90 percent equity stake in Salene Chrome Zimbabwe Limited for $90.
Salene has a 9 500 hectare claim in the mineral rich Great Dyke area of Zimbabwe.
Tharisa CEO Phoevos Pouroulis gave the finer details of the deal, highlighting the easy access of the mineral deposit and the better quality chrome in Zimbabwe compared to South Africa.
“Salene Chrome Zimbabwe is the secured 9 500 hectares of prospective land in the Great Dyke region of Zimbabwe, primarily to focus on the extraction or exploration of the illuvial chromite sands. So unlike the hard rock that we mine in South Africa, this is a weathered seam type of chrome that sits about a metre depth from surface to the bottom of the contact zone and its easily accessible, its free dig-gable, no requirement for drilling and blasting,” he said in an interview with analysts Proactive Investors.
Is business really this easy?
“And so we are excited at the potential, it was a nominal value purchase. It is a related party transaction. We acquired from Tharisa side 90 percent of the equity for some $90 with the understanding that the related party will have a 10 percent free-carry going forward and a royalty on the future sales,” Pouroulis said.
“We see it as a low-cost, low-risk entry point into Zimbabwe with scalable potential to be quite a significant chrome production area.
“Outside of the Bushveld complex in South Africa, the second largest known resources for platinum group metals and chrome is the Great Dyke in Zimbabwe so certainly with the change of regime in Zimbabwe it opened up the doors for us,” he said .
Tharisa, which has a strong cash balance of around $60 million intends to invest an initial $3,2 million in the Zimbabwean project.
“For the next 12 months we have put aside a budget $3, 2 million for trenching, resource delineation and declaration to a higher degree with the potential to construct a pilot plant for some pilot processing, just to outline the process flow of the potential plant that we will build there.
“While this is illuvial chromite, it is differentiated from the chrome we produce in South Africa in the sense that it a higher grade premium product, also destined for the metallurgical market. It’s a 48 to 50 percent chromite compared to the 42 percent, and it has a higher chrome to iron ratio, so it’s a sought after product attracting a $70 premium per tonne over the South African ores.”
Meanwhile, the effective date of the acquisition was May 15, 2018.
Salene eyes mining lease
Salene has been awarded three special grants under the Zimbabwe Mines and Minerals Act covering an area of approximately 9 500 hectares on the eastern side of the Great Dyke in Zimbabwe, which entitles it to mine the minerals thereon including illuvial chrome.
A special grant is issued in terms of Chapter 19 of the Zimbabwe Mines and Minerals Act and authorises the holder thereof to carry out mining operations for a specified mineral or minerals (including chrome in this instance), over the specified area for a period of 24 months, with the right of annual renewal on the expiry of such period on 90 days prior application.
And Salene intends applying for the consolidation of the special grant areas into a mining lease area valid for the life of mine.
Salene is also applying to the Zimbabwean government for National Project Status and for the special grant areas to be contained within a proposed Special Economic Zone.