May 9, 2010 - Vaaldiam Mining Inc. and Base Iron Ltd. ('BIL') are pleased to announce that BIL successfully completed two key 'conditions precedent' for the acquisition of the Kwale Mineral Sands Project ('Kwale') from Vaaldiam, as announced on 25 February 2010. BIL has completed due diligence and obtained Government of Kenya ('GoK') approval for the transaction. BIL must now raise funds and seek shareholder and regulatory approval for the transaction.
Vaaldiam CEO Robert Jackson said: "This is real progress towards completing the transaction, which generates cash flow with zero further investment by Vaaldiam. The GoK now recognizes the importance of this project to Kenya and cooperated in granting its approval. Our strategy is to sell non-core assets and deploy the funds on diamond and gold assets in Brazil. At closing, Vaaldiam will receive US$3 million in cash and a cash royalty of 1.5% on all product revenue from Kwale. It is conceivable that total revenues for the project could significantly exceed US$1 billion over its 11-year life, returning substantial value to Vaaldiam from the royalty."
BIL disclosed that it expects Kwale to produce an average of 330ktpa, 80ktpa and 35ktpa of ilmenite, rutile and zircon respectively over the first six years of operation from the higher grade Central Dune before declining to average 190ktpa, 55ktpa and 25ktpa over the subsequent five years. BIL quotes respected industry experts TZ Minerals International forecasts of constrained mineral sand supplies increasing ilmenite, rutile and zircon prices to US$125/t, US$690/t and US$1,150/t respectively by 2014. Vaaldiam CEO Robert Jackson said: "This is real progress towards completing the transaction, which generates cash flow with zero further investment by Vaaldiam. The GoK now recognizes the importance of this project to Kenya and cooperated in granting its approval. Our strategy is to sell non-core assets and deploy the funds on diamond and gold assets in Brazil. At closing, Vaaldiam will receive US$3 million in cash and a cash royalty of 1.5% on all product revenue from Kwale. It is conceivable that total revenues for the project could significantly exceed US$1 billion over its 11-year life, returning substantial value to Vaaldiam from the royalty."
