Work Program and Development Timing

The main focus of the Company is to a rapidly advance the development plans for the Ranobe Mine. All studies required for a development decision should be completed during the second half of 2012 and the final approvals in early 2013. Detailed engineering, fabrication, construction and commissioning is currently forecast to take 18 months with first production in 2014 assuming the development capital is raised late before the end of 2012.

Definitive Engineering Study

The Definitive Engineering Study, managed by TZMI with Engineering & Project Management Services as the lead engineering contractor, is now well advanced. This work entails the finalisation of processing and infrastructure design and updates the capital and operating cost estimates. This engineering work is also identifying long lead time items, developing the optimum mine plan, and preparing the tender for project engineering, procurement, construction and management (EPCM).

As part of the definitive engineering study we are also determining the preferred mining method i.e. (front-end-loader and hopper or bulldozer and trap), refining the number and the locations of the primary concentrators, the location of the Mineral Separation Plant (MSP) and investigating opportunities to improve export logistics. The primary purpose of this value engineering exercise is to ensure that we capture opportunities to improve the design to deliver an efficient and cost-effective and Project.

WTR is paying particular attention to export logistics.  Our engineers are currently investigating the potential of an alternate export path that involves locating the MSP at the mine site and trucking the final products, via a causeway over the river, to a stand-alone jetty located north of the city of Toliara.  This would allow direct loading of ocean-going vessels in reef-sheltered waters. This alternate export path offers some attractive advantages compared to the existing option, including:

  • A simpler overall operation, as it entails one less operating location, there will be no necessity to return the tailings to site, there will be only one road haul versus the current ‘road and pipeline combination’ and there will no necessity for a barge transfer; in addition it would be
  • More expandable – ‘haul-road and jetty’ can handle any expansion case that we can currently envisage; and finally there will be
  • Less community interaction – as the jetty under investigation is much further removed from the city of Toliara.

Studies are underway to confirm that this option can be developed for a similar capital cost and to identify what civil engineering work would be required for the jetty. Some additional geotechnical studies may be required to finalise the study for this option. In any event, the existing option of a ‘haul-road, slurry pipeline and MSP located at the existing port’ remains viable and will be pursued if the ‘stand-alone jetty’ alternative is not viable or cost effective.

Environmental and Social Impact Assessment

Coastal and Environmental Services, a South African environmental consultancy with extensive experience in mineral sands and other mining projects in Africa, has completed a draft scoping study. A public consultation process has been completed with group and one-on-one meetings held in Antananarivo, Toliara and the villages near the mine site and associated Project infrastructure.

These meetings sought feedback from key stakeholders, including the Government, NGO’s and community, on the potential impacts of the Project. This feedback is being incorporated into the Final Scoping Report, which will be submitted to the Office for National Environment (ONE).

Based upon the Final Scoping Report, the scope for the required specialist studies has been defined and these studies will be completed during the third quarter of 2012. Once the specialist studies are complete the Specialist Report, Environmental and Social Impact Report (ESIR) and Social and Environmental Management Plan (SEMP) will be drafted.  A public consultation process will be undertaken before finalisation and submission to the ONE for approval. Final environmental approval is currently expected to be received in the first quarter of 2013.

Surface Rights

The process of securing access agreements for roading, loading facilities, surface infrastructure and the mining area is well advanced. The identification of traditional owners and users of the land which will be required for the proposed mine site and associated infrastructure is almost complete. Once all owners and users are identified, the Company will formalise access agreements with them.

This activity is being facilitated by the Regional Coordination Committee, chaired by the Chef du Region. This committee comprises representatives from the Company, the Ministry of Mines, other ministries, and the mayors of the districts and communities that will be impacted by the Project.

The Company continues to receive support from all levels of the local community, from the Toliara regional government down to the individual villagers. Their support, including formal representations by the Chef du Region, district and commune Mayors and the Chiefs of each village to the Government of Madagascar was important in securing the mining licences.

Product Off-take

The Company has engaged with a number of potential off-take customers for all three of the proposed products from Ranobe – sulphate ilmenite, chloride ilmenite and a zircon rich non-magnetic concentrate. These discussions include straightforward supply agreements, as well as the potential for customers to provide prepayment as a source of development capital for the Project. These discussions are ongoing and the Company will update shareholders once they are finalised.

Capital Raise

In additional to the potential for customer pre-payment to partially fund the development capital, the Company is also exploring strategic partner options, at both the asset and the corporate levels. The balance of funding is expected to come from an equity raising later in 2012 but will only be undertaken once the capital requirement and funding from other sources has been defined.

At the end of March 2012, the Company had $10.6 million in cash, sufficient to fund all pre-development activities and to maintain the Company’s presence in Madagascar and corporate activities until at least the end of 2013.