MZI Resources is pleased to announce that it is set to finalise project finance for its flagship Keysbrook mineral sands project next month after successfully completing the due diligence phase of the funding process. In December 2012, MZI announced that two leading banks, one  Australian and the other South African, were mandated to provide the debt finance for the development of the Company’s Keysbrook mineral sands project in Western Australia. The debt facilities being arranged are typical of mining project developments and include a construction facility, a cost overrun facility, working capital facility and bank guarantee facility.  Financial close and provision of the funding will be subject to conditions precedent which are typical of project finance facilities, including finalisation of product offtake contracts.

Due diligence reports have now been completed by the independent technical, market, legal and other consultants engaged on behalf of the banks.  The due diligence investigations have confirmed that there are no substantive issues affecting the development or financing of the Keysbrook project. The banks are now progressing their credit submissions to obtain formal credit approvals for the debt facilities.  Final decisions by their respective credit committees are expected before the end of March.

Project Approvals and licences
The Company has all approvals necessary to commence project development and operations. The Office of the Environmental Protection Authority has recently granted an amendment to its approval relating to the location of the Keysbrook processing plant, access road and native vegetation preservation. The Company has been issued a Groundwater Licence (GWL) for 1.8GL p.a. of water from the Leederville Aquifer by the Department of Water.  MZI is awaiting issuance of a second GWL for the application to extract the balance of a further 0.2GL p.a. from the surficial aquifer.  This application is currently being assessed by the Department of Water and is expected to be issued shortly.

Doral Toll Treatment Agreement
MZI and its strategic partner Doral Mineral Sands Pty Ltd (Doral) are both continuing to advance the toll treating arrangement and capital works programme from a binding term sheet to a comprehensive full form agreement.  Completion is on schedule for Q1 2013.  MZI and Doral are continuing to review mutually beneficial investment opportunities in the mineral sands sector.

Product offtake and market outlook
MZI has advanced draft offtake agreements with prospective customers for its L70 and zircon concentrate products and is actively negotiating with a number of companies with respect to its premium L88 product. Major titanium dioxide pigment producers, industrial product manufacturers and mineral sands processors have all shown a keen interest in the suite of products available, with some key contracts expected to be announced shortly well in advance of project financing being completed.
The Company remains highly positive on the pricing outlook for its product suite, with market intelligence suggesting sector recovery ahead of the Keysbrook Project coming into production.  In addition, recent industry commentary is indicating that prices have begun to stabilise, with forecasts of price recovery in the second half of 2013.

Major global pigment producers have recently announced increased prices for titanium dioxide products.  These global producers are also indicating that demand for pigment products is expected to increase during the same time frame. The forecast timing of the market recovery is ideal for Keysbrook, which is set to start product shipments and sales in the first half of 2014.

Project Construction Planning Advanced
MSP Engineering are nearing the completion of the FEED component of the Keysbrook site and planned upgrades for the Doral MSP ahead of a final investment decision for project development by the Company. As part of this work, MSP Engineering has now received formal tenders on a number of major equipment and fabrication packages which are currently being evaluated.  Based on the quoted lead times for key equipment, the Company has revised its target dates for first production to Q1 2014, with first product shipments and sales in Q2 2014.  With long lead items now known and quantified, the Company has confidence in the delivery of the project to the revised schedule.