Jun 29, 2010 - In its interim results statement, Chromex Mining said that the turbulence in the chrome market appears to have abated, and forecast demand is again strong. Consequently as a chrome producer, the company expects to benefit.
According to Chromex, it made steady progress in the six months ended 31 March 2010, as the company completed the construction and commissioning of the spirals processing plant at the Stellite mine on the Bushveld complex in South Africa, and acquired Zimbabwe-operating Waylox mining.
For the six-month period, Chromex reported a loss of 399,000, the company said that the first-half was a period of reduced volumes and lower than expected recoveries as well as low Rand based chrome prices, however it remains confident in the future financial performance.
In South Africa, in order to maximise production levels, Chromex is adapting the way the mine operates. As of the 1 June 2010, the company has taken direct control of operations from contractors, and later in the year, the construction of a dense media separation circuit (DMS) will begin. Other capital projects, including the construction of a tailings thickener and spirals upgrade, are expected to be commissioned this month.
Once operational the DMS, along with the other improvements, is expected to double production to 40,000 Run-Of-Mine (ROM) tonnes per month by Q4 2010.
Chromex has secured US$5m funding to fund the improvements through a pre-paid sale agreement with a Chinese steel manufacturing company - Suzhou Kaiyuan Chemical Co Ltd. After the initial six month construction period, all lumpy chrome product will be sold to Suzhou for a period of two years, while a percentage of each lumpy chrome consignment will be used to offset the pre-payment.
Additionally, a study is currently underway at Stelite to determine the economics of adding a PGE floatation plant to treat the tailings arising from the gravity concentration plant at Stellite. The company noted that PGEs - comprising platinum, palladium and rhodium - are present in small concentrations in the chromite reefs.
"The directors are delighted with the results from the test work and look forward to developing Chromex's understanding of the economics of PGE extraction and treatment. The potential inclusion of PGE credits ... is expected to further underpin the already robust economics of the Stellite mine", Chromex stated.
The company also intends to expand via its two development projects, the Mecklenburg Chrome project in South Africa and an alluvial chrome project in Zimbabwe with 1.9Mt grading 13.8% Cr2O3.
At Mecklenburg, the company is beginning work on reviewing and updating the bankable feasibility study completed in 2007, with the intention of initiating the development of Mecklenburg early in 2011. The project is currently being developed whilst Chromex attempts to settle a legal dispute with Samancor Chrome ltd, who challenged the Chromex Mining Right at Mecklenburg.
The company stated that "Based on expert legal advice, we remain fully confident that the challenge is unsubstantiated ... Mecklenburg is wholly discounted in the current share price. The DMR is requesting Chromex to develop the Mecklenburg mine in advance of the settlement of the legal challenge".
Chromex also highlighted that in order to resolve the issue it proposed a joint venture with Samancor, for the development of Chromex's Mecklenburg chrome assets with Samancor's adjacent Twickenham and Surbiton chrome assets. The company said it is still awaiting a response from Samancor.
According to Chromex, Zimbabwe hosts higher grade chrome than is available in South Africa, and following the Zimbabwe Government s relaxation of its prohibition on the export of chrome ore in November 2009, the company decided to invest a small proportion of its assets into the country.
Subsequently, Chromex acquired Waylox Mining Ltd for US$1.15m. Waylox own the Trixie and Prince of Wales claims located in the prospective Darwendale area, on the Great Dyke of Zimbabwe.
The current mineral resource estimated for Trixie project stands at approximately 1.9Mt at an average modelled grade of 13.8% Cr2O3, Chromex stated. The company has initiated a feasibility study on the Trixie claims, which is expected to be completed in Q4 2010. Chromex highlighted that similar chrome operations on the Great Dyke are producing chrome concentrates with Cr2O3 grades ranging 47-50% and Cr:Fe ratios in excess of 1.9:1.
