MZI Resources attracts offtake interest from Jinzhou Titanium Industry

2015-12-17

Dec. 17, 2015 - MZI Resources has taken an initial step toward adding another long-term customer relationship to its mineral sands business with plans to make a  trial shipment to one of China’s largest and most successful chloride titanium dioxide producers.

MZI has signed a Letter of Intent and Cooperation (LOI) with Jinzhou Titanium Industry for a trial shipment of premium L88 leucoxene product from the company’s flagship Keysbrook project in Western Australia. 

Signing of the LOI follows successful testing of Keysbrook L88 samples by Jinzhou and a visit to MZI’s Perth office by senior Jinzhou executives in October 2015.

The two companies intend to enter into commercial negotiations regarding a large-scale offtake agreement to supply Jinzhou with Keysbrook L88.

Currently, over 85% of Keysbrook’s total production is committed under long-term offtake agreements with blue-chip international customers. 

All zircon concentrate production (totalling approximately 29,000 tonnes per annum) is committed under offtake agreements with China’s largest zircon processor Tricoastal/Wensheng.

All production of the titanium dioxide product L70 (totalling approximately 29,000 tonnes per annum) and two thirds of L88 production (25,000 tonnes per annum of about 38,000 tonnes per annum), is committed under offtake agreements with U.S.-based Chemours (formerly DuPont).

Smooth sailing

This latest move in securing offtake for Keysbrook follows immediately on confirmation that the project’s processing circuit has reached nameplate capacity, keeping MZI on track to achieve first sales in December 2015.

This milestone was reached less than a month after the start of commissioning for the wet concentrator, emphasising MZI’s capacity to systematically and efficiently realise operational aspects of the Keysbrook ramp-up in concert with customer relations work. 

Commissioning of the custom-built processing annexe at Keysbrook’s separation plant is continuing, with heavy mineral concentrate now being fed through the mill on a full-time basis. 

Production of the company’s first saleable leucoxene and zircon products was achieved last month on a trial basis, allowing for customer sales plans to be accelerated from an early-2016 start to December 2015.

Keysbrook is designed to produce approximately 96,000 dry tonnes of leucoxene products and zircon concentrate annually.

Analysis

Though still a preliminary step, the latest LOI with Jinzhou represents an important further acknowledgement of Keysbrook’s emerging status as a producer of high-value premium mineral sands products to the global market.

This point is further supported by the prestigious nature of MZI’s customer base, including some of the biggest mineral sands end-users in Asia and North America. 

Jinzhou is one of China’s largest and most successful chloride titanium dioxide producers and part of the CITIC Group. It started titanium dioxide production in 1960 and established China’s first chloride titanium dioxide production facility in 1990.

Importantly, more than 85% of Keysbrook’s total production is committed under long-term offtake agreements with blue-chip international customers.

Operational excellence at Keysbrook is coinciding with this offtake success, with the wet concentrator plant now running at nameplate capacity and initial production of saleable leucoxene and zircon products already achieved. 

MZI is now well on track to complete its ramp-up to full production during December, when first sales are also expected to be achieved.

These future milestones represent further potential price catalysts for MZI stock, which was strongly supported last month when the company’s major shareholder Resource Capital Fund committed to acquire shares to the amount of A$20.6 million in a placement.

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