Chromex Mining, the AIM listed dedicated chrome company, announced today that it has finalised plans to construct a new processing facility at its Stellite chrome mine (‘Stellite’) on the Western limb of the Bushveld Complex in South Africa. The plant, which is expected to be commissioned at the end of April 2009 for a cost of approximately ZAR 22 million (GBP 1.5 million), has been designed to process circa 40,000 tonnes per month run of mine ore. When operational, it will enable Chromex to supply a range of products including chemical grade and metallurgical grade sands in addition to chrome ore currently being produced.
To finance the plant construction the Company has secured a loan facility of ZAR 30 million (GBP 2 million). The lender has, subject to South African Exchange Control approval, the option to convert the loan into Chromex ordinary shares at a 22p strike price.
In line with the reduced demand for chrome, Chromex has temporarily reduced production at Stellite to approximately 10,000 tonnes per month of run-of-mine ore. However, importantly the Company currently has two users seeking off-take agreements for this ore, and is also actively discussing an off-take agreement for chemical grade sand. An update on these developments will be provided in due course.
Stellite currently has a SAMREC compliant resource estimate of 31.9 million tonnes of chromite, which is being mined profitably and further underpins the robust nature and economic viability of the Stellite project. Chromex plans to upgrade the inferred resources through additional drilling and look at the feasibility of developing the underground resources in 2009.
Chromex CEO Russell Lamming said, “The construction of the plant will provide a further string to our bow and allow us to deliver a range of products to market which have the ability to positively impact revenues going forward. Importantly, in addition to the loan facility we have a healthy cash position of £2 million and a low cost base which places Chromex in a strong position to weather the current economic storm and actively position itself for when demand for beneficiated chrome products rise once again.”