(Alliance News) - Kabanga Nickel Ltd announced Monday that BHP Group PLC will invest up to USD100 million into the company, which will go towards accelerating the development of the Kabanga nickel project in Tanzania.
Kabanga Nickel Ltd is a UK-based private firm which is developing and operating the project.
Diversified miner BHP will invest a total of USD90 million in unsecured convertible securities into Kabanga Nickel, starting with an initial USD40 million tranche, followed by USD50 million once certain conditions are met.
The first tranche will be converted into an 8.9% stake in Kabanga Nickel for BHP, and after the second tranche is invested, the interest will increase to 18%.
Proceeds from the investment will go towards an enhanced metallurgical drilling programme, which will allow for an updated definitive feasibility study, which is on track to completed by the end of 2022.
The Anglo-Australian miner will also have the right to make additional investments into Kabanga Nickel, subject to the achievement of certain milestones.
In addition, BHP will invest USD10 million into Lifezone Ltd, a company which has developed a method of hydrometallurgical processing, which is expected to be more cost effective and environmentally friendly than smelting.
The USD10 million investment will go towards building and operating a refinery in relation to the project.
The Kabanga nickel project contains a resource estimate of 1.86 million tonnes, at a grade of 3.44% nickel equivalent. The project timeline anticipates first production in 2025, target an annual nickel output of at least 65,000 tonnes, and a 30 year life of mine.
"BHP is the ideal partner for Kabanga Nickel, bringing significant advantages and expertise that will enable us to move ahead with the project. BHP's investment reflects the project’s strong ESG credentials and its role in improving environmental performance throughout the nickel value chain. In addition, BHP's funding support of Lifezone's hydromet technology – the future of sustainable metals processing – will drive progress towards a greener world," said Kabanga Nickel CEO Chris Showalter.
Shares in BHP were down 0.8% at 2,287.00 pence on Monday in London, while its Johannesburg shares were 0.1% lower at ZAR484.80.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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