(MENAFN - ProactiveInvestors - Australia) MZI Resources has appointed two leading banks to arrange financing for its flagship Keysbrook mineral sands project in Western Australia, allowing construction to start in March 2013.
The Australian and South African bank will be the joint lead arrangers for the debt facilities, which comprise a senior secured facility for the estimated project capital cost of 54 million, a capital cost overrun facility, working capital and bank guarantee facilities.
Independent experts engaged on behalf of the banks will conduct due diligence on the Keysbrook project over the next six weeks.
Following the completion of due diligence and receipt of consultant reports, the banks will progress towards formal credit approvals.
Financial close and first debt funding are expected to be subject to conditions precedent typical of project finance facilities, including finalisation of product offtake contracts.
MZI said the decision to fund development of Keysbrook through a combination of debt and cash generated from the Lethbridge South operations will provide the best return to shareholders while maintaining debt within sustainable limits.
Keysbrook has also been granted a 10-year water extraction licence by the Department of Water and has secured shire approval for the current planned Keysbrook plant location and a preferred new HMC transport route from the mine via the Forrest Highway to Doral's mineral separation plant at Picton.
The Keysbrook Feasibility Study found the project would have a very high rate of return of 71% and payback period of less than 15 months.
Operations are expected to start in late 2013 and mining is expected to continue for potentially 11 years.