MZI flags delays in upgrades

Mineral sands miner MZI Resources has announced the completion of upgrades at its Keysbrook operation, while also outlining delays in the project and attempts to seek waivers from some conditions of an $80 million debt funding package.

MZI said the modifications, which increase production from 4 million tonnes per annum to 5.25mtpa, were completed in March.

However, the company said the commissioning process had taken considerably longer than planned due to a number of disruptions.

“Furthermore, this situation had an adverse impact on operational performance at the wet concentrator Pplant (WCP) over the entire March quarter, with Keysbrook only recently achieving steady-state throughput and recovery rates in mid-June, compared with the initial expectation of mid-April,” MZI said in a statement to the ASX.

“Delays in achieving specific, sustainable production rates set as key conditions to drawdown tranche B of Resource Capital Fund’s term loan facility (US$7.5 million), mean that MZI has now approached RCF to seek a waiver of these conditions.”

In March the company announced a new $80 million debt funding package with RCF, which is a major shareholder in MZI.

Under the agreement, RCF increased the existing capital facility by $US10 million to meet short-term commitments.

Despite the delays, MZI managing director Martin Purvis said the project was now hitting targeted production.

“Whilst delays in lifting production in the first half of calendar year 2018 have been disappointing, recent improvements in performance at both Keysbrook and Picton, combined with improving fundamentals in the mineral sands market, bode well for the additional saleable products now entering the MZI pipeline,” he said.

“Our technical team has resolved many issues and challenges encountered during the 5.25mtpa modification works, with May being a watershed month for performance and June demonstrating further progress toward meeting or exceeding the target rates set across the operations for the expanded 5.25mtpa target.

“We look forward to working closely with RCF in order to secure waivers for the next tranche of the term loan facility that will enable MZI to take advantage of this increased production.”

Shares in MZI were up 6.67 per cent at 8 cents each today.