LONDON (Alliance News) - FinnAust Mining PLC on Wednesday said it is aiming to begin selling production from its recently acquired titanium project in Greenland before the end of the first quarter.
FinnAust signed binding agreements back in December to acquire an initial 60% stake in Bluejay Mining Ltd, which wholly-owns the Pituffik titanium project in Greenland, with an option to acquire the remaining 40%.
The Pituffik project has had initial fieldwork carried out in 2015 by Bluejay, which has revealed the presence of a "very large and unusually pure" titanium occurrence, with work to date indicating the project could be in the top percentile of heavy mineral-grade projects worldwide.
On Wednesday, FinnAust provided an update on the work carried out on the project in 2015 by Bluejay to try to better define the areas likely to host economic mineralisation.
The project contains three main target areas along an 80 kilometre coastline which is "historically proven" to contain large, high-grade accumulations of ilmenite deposits, FinnAust said. The target areas focus on raised beaches, active beaches and drowned beaches.
Raised beaches, referring to the land along the coastline excluding the beach itself, is thought to contain ilmenite accumulations over widths of more than one kilometre, but the depths of the mineralisation is unknown. However, the area runs along more than 20 kilometres of coastline giving a large work area.
Active beaches, referring to the area between the raised beaches and the shallow area of the sea, have historically produced samples containing around 70% ilmenite by weight. Drowned beaches, referring to the areas fully submerged under water, also will be a target area.
Ilmenite is the most important ore of titanium, which is the commodity the project is focused on extracting. Titanium dioxide, one of the products derived from ilmenite, is primarily used as a bulking agent and as white pigment for all paint products used in the defence and aeronautical sectors.
One area that FinnAust is hoping will boost titanium demand is the development of 3D titanium printing, which has a "significant commercial application" and has seen "considerable growth" over the last five years, according to the company.
Moving forward, FinnAust is expecting to secure a string of reports and results from work being carried out over the project before the end of the first quarter of 2016, with the hope it can begin selling a product before the end of March.
Seafloor bathymetry and boomer seismic profiling has been carried out over the drowned beaches to measure the depth of water and to analyse sediments on the seafloor whilst 69 samples from the same area have been collected, with results alongside the full bathymetry report expected to be published before the end of the first quarter.
Sampling results from the active and raised beach areas also will be delivered before the end of the quarter.
FinnAust is looking for the "simplest and most appropriate" way of concentrating the ilmenite into a saleable product as well as selling a pure ilmenite concentrate. The company wants to begin distributing product "in the next three months", and said it will be focused on finalising initial offtake agreements for the project throughout the year.
"The potential of this very pure titanium occurrence is clear and attractive to us; the path to generating consistent cash flow is simple and well understood by industry with little to no metallurgical complexity or processing problems," said Managing Director Roderick McIllree.
"It is significant that the mineralisation has been proven to continue into the drowned beach environment, which is potentially the most significant of the three target areas. However, we believe each of the targets to be globally significant in their own right," he added.
FinnAust is now working with local authorities to finalise the transfer of the licences for the project to the company, which will lead to FinnAust applying for the appropriate licence needed to cover the marine based areas of the project, which it said would take around 4 to 12 weeks to process once it has submitted its application.
As those sample results and report are released over the coming months, FinnAust plans to provide a full update on the plan for 2016.
Although FinnAust plans to begin selling within a matter of months, the deal to acquire an interest in the Pittuffik project has met with some investor concern, as it will have a major impact on the company's share capital moving forward.
The deal was split into two parts to ensure the initial shares issued to Bluejay did not exceed 30%, allowing the pair to avoid invoking takeover rules. After the first stage, Bluejay holds a 29.99% stake in FinnAust, which stressed the second part of the deal would not be exercised if it would trigger a reverse takeover pursuant to the AIM rules.
That means any further shares issued to the Bluejay vendors after the initial shares will likely be accompanied by a placing or similar activity to ensure Bluejay's stake does not rise above 30%. That will mean existing shareholders in FinnAust will either have to commit to participating in further fundraisings to maintain their stakes or face dilution.
The amount of shares being issued as part of the deal is significant, with FinnAust's share capital standing at a smidgen under 296.0 million shares before the deal. This means it is increasing its share capital by over 55% to acquire the first 60% stake in Bluejay, including the deferred consideration.
If it elects to acquire the other 40% of Bluejay, its share capital will have increased by over 92% in total. FinnAust can exercise that option within a four-year period.
FinnAust shares were trading down 1.6% to 1.58 pence per share on Wednesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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