Britannia Mining Inc, whose subsidiary is Britannia (Malawi) Limited, is anticipating a capital injection in excess of $25 million (K11.2 billion) which will, among others, boost local subsidiary’s exploration activities of iron ore at Nthale in rural Blantyre.
The local subsidiary was in 2009 granted exclusive prospecting licences by the Malawi Government to conduct mineral exploration activities over a total area of 650 square kilometres at Nthale, located 22 kilometres north of Blantyre, with the intention of developing 100 million tonnes of ore, sufficient to constitute a world class resource.
The capital infusion is expected to be through a senior debt facility proposed by REM Capital—an European private equity firm founded by Gavin Scott; fund manager who was recently appointed to Britannia’s board as a non-executive director <http://www.britanniamining.com/britannia-mining-strengthens-board-appointment-non-executive-director/> —according to a statement seen by Business News.
“Securing substantial, non-toxic financing, affords us not only the ability to pursue the completion of our current projects, but to aggressively leverage revenue generating opportunities that are immediate and can positively impact our 2014 balance sheet,” said Nicola Newmarch, chief operating officer of Britannia Mining.
The company’s management is confident that the formal proposal from REM Capital will arrive closer to $40 million, given the greater immediate income value of acquisition targets and current resource projects.
The money, according to the company’s statement, will give the miner the ability to begin preparing the roll-out of their 2014 plan.
Said Newmarch: “We believe that REM Capital truly recognises the value in Britannia’s mineral projects as well as this management’s capability. With a first round capital infusion of this size, we will have the means to expedite various programmes which will establish viable profit centres for the company.”
Iron ores are rocks and minerals which metallic iron can be economically extracted, and the ores are usually rich in iron oxides and vary in colour from dark grey, bright yellow, deep purple to rusty red.
Britannia Malawi completed magnet survey which found high grade iron ore deposits, a development that is good news for Malawi because on the global market, the price of the mineral is at an all time high.
Nthale iron ore deposits, the company said, rise 40 metres above the Chileka plain and are located seven kilometres from the nearest railway station at Lirangwe which offers the direct link to a number of ports in neighbouring Mozambique where vessels can load cargo for export across Indian Ocean.
A recent study commissioned by Britannia Malawi in 2010 found that regional geophysical and magnetic signature at Nthale is encouraging with evidence detailing historical sampling during the 1960s, confirming that the area bears a high grade ore.
The company is also doing some exploration works for coal at Mphwaphwa in Mzimba and Ngana in Karonga.
According to World Bank’s review of Malawi’s mining sector shows that the country’s mining prospects are expected to jump to $500 million from the current $100 million between now and 2018.
Currently, the mining sector contributes close to 10 percent to the gross domestic product (GDP) and projections are that the industry will contribute up to 30 percent in the few years to come, according to recent studies.