(MENAFN - ProactiveInvestors - Australia) MZI Resources (ASX: MZI) has strengthened its cash position after selling its third shipment of high-value zircon-rutile Heavy Mineral Concentrate for US11.2 million.
The sale was made to China's largest mineral sands processor and substantial shareholder of MZI, Tricoastal Minerals (Holdings) Company Limited, which is contracted to acquire all the HMC from the Lethbridge South mine in the Tiwi Islands, Northern Territory.
The shipment amounted to almost 8,600 WMT of HMC.
MZI will receive 90% of the sales proceeds early next week, with the balance adjusted in accordance with assay and analysis results.
The sale will boost MZI's cash position, which stood at 4 million at the end of September 2012, with the company expecting to further increase cash reserves with a fourth and final shipment from Lethbridge South early in the March Quarter of 2013.
Another plus for MZI is that fellow WA mineral sands group Doral Pty Ltd has an option to acquire 250 million shares in MZI for 0.023 a share - which would inject a further 5.75 million cash into MZI.
The option is in the money with MZI closing last night at 0.028.
Cash to support Keysbrook development
MZI's growing cash balance supports the company's plan to finance development of its Keysbrook mineral sands project in WA through a combination of cash on hand and project debt.
This means that MZI is in a strong position entering into the Keysbrook development funding phase. The recently completed Feasibility Study on Keysbrook found the project would have a development cost of just 64.3 million, generating a 71% Internal Rate of Return and have a payback period of less than 15 months.
MZI aims to start construction of Keysbrook in the March Quarter of next year, with the first shipment targeted for the March 2014 Quarter.