Key message: Manganese has been on the cards for some time – Afrimat has made it move. High iron ore prices will help fund the development of this greenfield deposit.

  • Afrimat announced the acquisition of the Gravenhage manganese mining right in the Northern Cape (50km north of Hotazel). Afrimat has been looking at manganese for some time as it complements the bulk commodity mining business already established in the region.
  • Gravenhage is an undeveloped long-life resource in the northern part of the Kalahari Manganese Field. A long legal battle delayed the award of a mining right for the deposit to seller Aquila Steel, with the Constitutional Court in February 2019 eventually upholding a High Court ruling to award the mining right to Aquila.
  • The purchase price is US$45m plus R15m for the property. A first tranche of US$30m will be paid on fulfilment of the conditions precedent (key being section 11 transfer of mining right and Water Use License) plus R15m for the property purchase. A second tranche of US$15m will be payable at the earlier of Afrimat diluting its mining right interest to less than 50% or 12 months after the first product is mined.
  • A summary of the deposit can be found on the Aquila Resources website (click here). We include these details in this report.
  • A feasibility study was conducted by Aquila for a medium to high grade manganese project at the Gravenhage Deposit, based on a JORC-compliant Reserve of 20.2Mt grading 40.1% Mn. The study proposes a 1.5Mtpa run-of-mine open cut operation, with subsequent underground mining by decline access from the open pit. The DFS provides for oxide ore to be crushed and screened to produce 1.125Mtpa of lump ore for export and 330ktpa of fine ore for sale to domestic sinter plants.
  • The capital development cost is estimated at R1.5-R2bn (including the cost of the mining right and property). Production could start from 2H CY22.
  • The project is viable using trucks to transport the ore as opposed to rail (rail R700/t and trucks R1000/t), although a rail option is being discussed with Transnet.
  • Afrimat can fund the acquisition and development of the mine through existing cash flows and some debt – a capital raise is not necessarily required.

Read full report