Alexander Mining appointed by Tiger Resources to design key plant
9:05 am by Kam Patel Alexander Mining appointed by Tiger Resources to design key plant
Alexander Mining (LON:AXM), the mining technology group, has been asked by Tiger Resources (LON:TIR, ASX/TSX:TGS) to design a pilot plant for its flagship Kipoi copper/cobalt project in the Democratic Republic of the Congo. The appointment lends further commercial credibility to Alexander’s expertise and ability to deliver.
In a statement this morning Alexander said Tiger Resources has asked it not only to design a pilot plant but also investigate the use of the former’s proprietary AmmLeach technology.
AmmLeach is claimed by Alexander to be an environmentally friendly, cost effective process for the extraction of base metals from ore deposits and concentrates, allowing the production of high value products at mine sites.
Alexander has been asked to have a preliminary design for the plant ready within two weeks.
Tiger began producing at its flagship Kipoi project in April 2011. The Stage 1 plan of the Kipoi project is for annual production of 35,000 tonnes of copper.
The Kipoi Central high grade zone includes a cobalt mineral resource estimate of 7,400 tonnes of contained cobalt, of which the Kipoi Central Stage 1 Pit contains 590,000 tonnes ore at 0.75% cobalt for approximately 4,500 tonnes of contained cobalt.
Tiger has indicated it would like a pilot cobalt plant to be operational early in 2012.
Martin Rosser, chief executive of Alexander Mining said: "We are delighted to be working with Tiger Resources to unlock the potential of its asset with a second pilot plant opportunity for our company in the Democratic Republic of Congo. “
Rosser added that the company is continuing to pursue other “exciting” base metals opportunities and that “advanced discussions are underway in Australia and Latin America".
Tim Freeborn, analyst at broker Xcap, hailed the “excellent news” and said it makes him even more confident in Alexander’s prospects and his 26p price target for its shares.
The analyst adds that while it is still to be announced how the plant will be funded, he assumes Tiger it will fund the capex and offer Alexander a fee or royalty.
This would be in contrast to the JV Alexander announced in February with Anvil Mining at its Mutoshi copper/cobalt project, also in the DRC. Under that deal Alexander is to recoup the capital cost from revenue first.
Freeborn estimates Kipoli has a cobalt-only value of around $250m and maybe offers a 2% royalty to Alexander. But more importantly, a successful pilot plant would be the catalyst for bringing major commercial credibility to Alexander.
“By mid-2012 we could see commitments for two full-scale mines in the DRC using AmmLeach and would expect other opportunities in the country and in other parts of the world to be gearing up. "
He also points out that giant trading house Trafigura is the largest shareholder in both Anvil and Tiger: "A pattern may be emerging where powerful investors drive adoption of the technology. “
Xcap expects to start issuing formal forecasts for Alexander when it has secured more details about the agreements with Anvil and Tiger. For the time being, the broker reiterates ‘buy’ on the shares.
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