October 07, 2008

Chromex buys Stellite chrome project in South Africa

It is reported that Chromex Mining has finalized the acquisition of the Stellite chrome project on the Western Limb of the Bushveld Complex in South Africa and plans to start producing chrome ore from the open pit operation within the next few months.

AIM listed Chromex will pay ZAR 14 million and issue just over 6 million new Chromex shares for Mkhombi Stellite which holds a 51% stake in Ilitha Mining which, in turn, owns the Stellite chrome project.

Chromex Mining said that "The Stellite project will more than double Chromex's controlled chrome resources from 9 million tonnes to approximately 24 million tonnes and reduce the company's operational risk through the development of two mines instead of a single, standalone operation."

Chromex will use contract miners initially and has no plans to move into smelting to convert the chrome ore into higher value ferrochrome. Stellite has a chrome resource of 15 million tonnes and the Mecklenburg project a resource of about 9 million tonnes.

Mr Nigel Wyatt CEO of Chromex said that he is confident that it would receive mining rights for that property soon. He added that Chromex aimed to ramp up production to produce about 20,000 tonnes per month of chrome ore and chrome sands at Stellite.

Mr Wyatt said that about 3 million tonnes of the Mecklenberg resource could be mined through an open pit with the rest likely to be accessible through the development of a decline shaft. Chromex should be able to start building-up production at Mecklenburg in nine to 12 months after receiving the mining rights and successfully securing surface rights from the communities in the area. The company plans to build a washing plant at Mecklenburg.

Mr Wyatt further added that Chromex may consider investing in beneficiating the ore from Stellite by building a washing plant but added the company would only look at that in due course.