Matilda strikes alliance with Doral at Keysbrook

THE BOURSE WHISPERER: Matilda Zircon has entered a strategic alliance with leading mineral sands producer Doral over its Keysbrook mineral sands project in Western Australia.

Matilda has struck a binding toll treatment term sheet, short term funding agreement and share subscription agreement with Doral the company said puts it on track to becoming a mineral sands producer.

Construction at Keysbrook is scheduled to begin in late 2012 and first production targeted for late 2013.

Matilda claims the Keysbrook project will make it one of the world’s largest annual producers of leucoxene, an important feedstock for titanium dioxide production.

Based on current resource estimates, Keysbrook will have a mine life of more than eight years.

The toll treatment agreement with Doral will result in Matilda producing approximately 10,000 tonnes of zircon and 70,000 tonnes of leucoxene annually from the Keysbrook project.

Key terms of the toll treatment agreement are:

–    Toll treatment cost of approximately $65 per tonne of wet concentrate;

–    Matilda to contribute an estimated $5 million to $10 million for Doral plant modifications during the construction phase of Keysbrook; and

–    Toll treatment continues for the life of the Keysbrook project.

Doral will also provide a US$4.5 million short-term loan facility to Matilda, ensuring it has sufficient funds to complete a feasibility study at Keysbrook as well as other activities required for the project’s development.

“This agreement is a massive game-changer for Matilda and its shareholders,” Matilda Zircon chairman Mal Randall said in the company’s announcement to the Australian Securities Exchange.

“It means Matilda will only need to build a wet processing plant and not a dry processing plant, effectively saving the company about $15 to $20 million in capital expenditure and in the process slashing the risk profile of the project.

“To secure such a strategic agreement with a company which is as globally respected and as highly experienced as Doral, is a huge vote of confidence in Keysbrook.

“We can now look forward to the imminent completion of the feasibility study, which we are confident will confirm that the economics of the project are extremely robust, and proceed as rapidly as possible towards construction of what will be a world-class mineral sands project.”