Strandline secures U$26m from Nedbank to finance its Fungoni project in Tanzania

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TANZANIA – Australian based Strandline Resources Limited has secured a loan of U$26 million to finance Fungoni Mineral Sand Project in the outskirts of Dar es Salaam.

In its 2020 annual report, the company said Fungoni’s success is parallel to similar progress being made at its flagship Coburn Project in Australia.

 The company said that while the pace of activity was at times limited by the impact of COVID-19, the signing of a Project Finance Facility Agreement with Nedbank CIB for development of the Fungoni project succeeded.

“This facility accounts for most of Fungoni’s total estimated capital cost of US$35 million (excluding financial costs). All parties are now working towards satisfaction of conditions precedent to financial close and first draw down,” the report noted.

The report further noted that the facility remains subject to finalisation of conditions precedent to financial close and first draw down and includes  finalising  the  additional  finance  documents  with  Nedbank,  obtaining  the  remaining  government  related  approvals  (including  completing  documentation  for the  Tanzanian  Government’s  16 percent free-carried  interest  in  the  project  company,  compensation  and  resettlement  agreements  in  relation  to  project  site  access)  as  well  as  satisfying  the  equity shortfall.

“As part of the equity process, Strandline is in discussions with international finance institutions about strategic equity investment in Fungoni and/or Strandline. In preparation for development, the company awarded several key construction contracts, including the supply of a purpose-built power solution for the project by Aggreko and the civil bulk earthworks construction contract to Milembe Construction Company Limited”.

Fungoni Mineral Sands Project which is situated 25 kilometres south of Dar es Salaam Port is based on conventional open pit dry mining and processing beneficiation to produce premium quality zircon sand, chloride ilmenite, rutile and monazite containing rare earth minerals.

“Development of Fungoni is expected to pave the way for a succession of major mineral sands projects along the coastline of Tanzania, including the large-scale Tajiri project in northern Tanzania. The company has secured three major off-take contracts covering 100 percent of forecast revenue for the life of the Fungoni project,” the annual report added.

The report also said the global mineral sands market continues to grow with higher value minerals being needed in abundance.

 “Mineral sands products are used in everyday life and demand continues to grow, largely driven by urbanisation, global growth and an extensive array of applications,” the report added.

“With global supply progressively reducing due to mine closures, declining grades and depleting stockpiles, new capital projects are required to meet ongoing demand. The advanced nature of Strandline’s projects positions it well to capitalise on the forecasted emerging supply deficit. The mineral sands industry generally is oriented towards the supply of two main raw products, zircon and titanium dioxide ores,” Strandline Resources annual report stated.

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