Strandline Resources Ltd. is nearing an investment decision for its Fungoni mineral sands project in Tanzania and believes it could have the operation in production within a year of giving it the green light.
"The path to profitable production is short, based on proven low-cost execution strategies, the payback period and rates of return are very attractive, and there is potential to grow mine life and re-use the infrastructure on future Strandline projects," Managing Director Luke Graham said Oct. 5.
According to Strandline, the results of a recently completed definitive feasibility study position the Fungoni project as a high-grade, low-cost operation with a fast payback.
The study forecasts a pre-tax net present value of US$42.9 million, an internal rate of return of 56.2% and a 2.7-year payback period from the start of construction.
The operation would generate US$168.1 million in revenue and US$98 million in EBITDA over an initial 6.2-year life.
The capital cost is estimated to be US$30.0 million, while all-in sustaining costs over the life of the mine are expected to be US$71.2 million.
As part of the DFS, Strandline has also delivered an initial reserve for the Fungoni project.
The company said in a separate Oct. 5 news release that the proved reserve amounts to 12.3 million tonnes at 3.9% total heavy mineral for about 480,000 tonnes of contained heavy mineral, which can support a 2 million-tonne-per-annum mining operation for 6.2 years.
According to Strandline, there is the potential to increase the reserves and extend the life of the Fungoni mine by further optimizing the pits as the price improves.
The company has begun work to secure project approvals and financing and is also preparing for major contracts for engineering, procurement, and construction and bulk earthworks.
First production is forecast to be reached by week 52 from the final investment decision being made, while ramp-up is expected to take a further 12 weeks to reach full steady-state production.