BMR secures letter of intent for offtake from Kabwe project

JOHANNESBURG (miningweekly.com) – Aim-listed BMR on Wednesday said it had been approached for an offtake agreement for agricultural-grade zinc sulphate heptahydrate (ZSH) and lead sponge from its Kabwe project, in Zambia.

The mineral processing group secured Zambia Environmental Management Agency approval for the environmental- and social-impact assessment for its tailings retreatment process and the construction of a pilot and a main treatment plant at its Kabwe project.

Last week, BMR received a letter of intent (LoI) from a private South African mining, energy and agribusiness group, which outlined requirements for 500 t/m of ZSH, 300 t/m of lead sponge and, eventually, 300 t/m of London Metal Exchange-grade zinc cathodes.

BMR, which continued to refine the process and advance the engineering design work and plant construction plans, would draw down from a $2-million facility to start the construction of the now-configured $2.68-million plant to produce the ZSH and lead sponge in the quantities required.

The aggregate cost of $2.68-million comprised 52% of confirmed quotations, 18% of factored costs and 30% of internally estimated costs in respect of $1.8-million for mechanicals, $400 000 for instrumentation and electrical items and $480 000 for labour, pipework and other ancillaries.

BMR would immediately focus on securing larger items with long lead times, including the thickeners, leach/precipitation tanks and agitators.

The group’s current £1-million-plus cash resources and the drawdown facility were expected to cover the costs of the plant, which would be commissioned by early 2017.

The LoI, which remained subject to a completed sale and purchase agreement, significantly enhanced the returns from BMR's zinc and lead assets over a sustained period of time to the benefit of shareholders, the company said.

“The directors expect that the net sales generated from the ZSH and lead sponge will provide sufficient funds for the company to complete the zinc electro-winning and copper/iron removal circuits at the plant,” BMR added.