Cove executes Letter of Intent with potential offtake partner

THE BOURSE WHISPERER: Cove Resources has signed a Letter of Intent (LOI) with Sachtleben Pigments Oy.

Sachtleben Pigments Oy is a subsidiary of Sachtleben GmbH, which is one of the world’s largest producers of pigment titanium dioxide and functional additives.

Cove said the LOI marks an important step in its development plans for the Koivu titanium project.

The LOI forms the basis of a potential long term working partnership whereby Cove would include Sachtleben and its advisors in all aspects of a Bankable Feasibility Study into the project.

Sachtleben would look to provide ongoing support to Cove for the Koivu titanium project providing necessary resources and assistance to ensure the Ilmenite concentrate mine product will be of an acceptable quality.

“Cove is confident in the quality of the Koivu Ilmenite product as previous test work at Pori in 2001 confirmed the concentrates suitability for the Sachtleben plant,” Cove Resources saidin its ASX announcement.

“At that time 1,600 tonnes of ilmenite concentrate was successfully processed in a full scale batch test.”

During the BFS, Cove will work with Sachtleben with a view of executing a long term titanium feedstock supply contract.

Sachtleben & Co was established in 1878 and has been producing TiO2 at its Pori plant since 1961.

Pori, on the west coast of Finland, is the closest Sachtleben pigment plant to Koivu and the BFS will look at modelling transport routes to Pori and other Sachtleben plants in Germany.


Location of the Koivu titanium project relative to the Sachtleben
Pigments Oy, Pori plant and other key plants in Europe. Source: Company


The ports of Kokkola and Pori are currently used for bulk cargo, and discussions with port authorities indicate that excess capacity is present.

Cove acquired the Koivu titanium project from Endomines Oy in July.

The company said it considers Koivu to be an advanced-stage project and that the LOI builds on a scoping study the company recently completed on the project.

Highlights of the Koivu Scoping Study include:

–    The project’s existing resources may support a 20 year, 1.6 million tonnes per annum operation, which equates to a 250,000 tonnes per annum production rate;

–    The project has an estimated Net Present Value of US$131 million and Internal Rate of Return of 32 per cent (pre-tax, 10 per cent real discount rate, 100 per cent equity, direct and indirect capital costs plus 35 per cent capital expenditure contingency);

–     Operating Costs of $110.50 per tonne of titanium pigment after magnetite by-product credits; and

–    Annual operating margin of $28.63 million.

Cove said its goal is to develop the project into a large scale mining operation producing a high quality titanium pigment feedstock concentrate, supplying European markets, with first full year production planned for 2015.

The company claims the development of the Koivu project will position it as a globally significant, long-term supplier of quality titanium feedstock.