Mineral sands miner MZI Resources will spend $5 million to significantly upgrade the output capacity of its Keysbrook operation near Serpentine, which has been underperforming since it came online in 2015.
Perth-based MZI said today the staged $5 million investment would be funded initially through a $US5 million increase in its facility agreement with Resource Capital Funds, with work to be completed by early next year.
The operating plan will allow the Keysbrook plant to achieve an annual throughput rate of 5.25 million tonnes of ore, with saleable production to increase by 50 per cent during the current financial year while unit cash costs are expected to drop by up to 30 per cent.
With the operating plan, Keysbrook is expected to start generating a surplus by the end of FY18.
“As the last two years have showed, it has been a far more complex challenge to get Keysbrook performing to the required level that was envisaged when operations commenced in 2015,” managing director Martin Purvis said.
“Much of the heavy lifting to resolve many unforeseen challenges and difficulties has been done and the lessons learnt have been instrumental in constructing the new plan within a heightened level of confidence.
“The plan provides us with a clear, systematic and realistic pathway to capitalise on the improvements already achieved in 2017 and deliver robust cashflows and attractive earnings on a sustainable basis despite higher underlying costs of operating at Keysbrook.
“Significantly, we believe this plan will also provide additional opportunities to extract additional operating and financial benefits over time.”
Shares in MZI were 2.4 per cent higher to 13 cents each at 1:20pm.
