Mayur Resources Ltd. said Jan. 7 that it secured up to US$25 million in funding from China Titanium Resources Holdings Ltd. in return for a 49% stake in the Orokolo Bay industrial mineral sands project in Papua New Guinea.
The Orokolo Bay project is planned to be developed in two stages, with an initial two-year, 100,000-tonne-per-annum stage-one pilot plant to provide test-scale shipments to potential off-take partners.
Stage two development, which comprises of a full scale plant, will be triggered upon the signing of long-term deals with off-take partners, as well as obtaining permits and the completion of a definitive feasibility study for the operation.
Under the binding term sheet, China Titanium and Mayur will each fund 50% of the maximum budget for the stage one pilot plant. However, Mayur may opt to defer half of its share of the funding, resulting in China Titanium funding 75% of the stage one expenditure. Mayur will be liable for funding any expenditure in excess of the maximum budget.
Should Mayur proceed with stage two development, China Titanium will fund the entire capex of the full scale plant, subject to the total funding for stage one and stage two not exceeding US$25 million.
In the event that development costs exceed US$25 million by stage two, Mayur will extend loans to wholly-owned subsidiary MR Iron PNG Pte. Ltd., which holds the Orokolo Bay project. The loans will be repaid through the cash flows generated from the plant's stage two operation.
A definitive deal is expected to be signed by the end of January.