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SEP - Sephaku Holdings Limited - Fluorspar update
Sephaku Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/003306/06)
Share code: SEP
ISIN: ZAE000138459
("Sephaku Holdings" or "the company")
Fluorspar update
Sephaku Fluoride (Pty) Limited ("Sephaku Fluoride"), a wholly owned subsidiary
of Sephaku Holdings, is planning to establish a beneficiation production
facility consisting of a sulphuric acid plant, a hydrogen fluoride plant and an
aluminium fluoride plant ("the Production Facility"). A pre-feasibility study
("PFS") on the Production Facility was completed at the end of 2009 and the
studies required to complete a Definitive Feasibility Study ("DFS") will
commence shortly. The overall co-ordination and independent review for the PFS
was performed by Venmyn Rand (Pty) Limited ("Venmyn") and specialist input
provided by independent specialist consultants.
Nokeng Fluorspar Mine (Pty) Limited ("Nokeng Mine"), a wholly owned subsidiary
of Sephaku Fluoride, successfully completed a DFS by independent specialist
consultants during October 2009 on a proposed fluorspar mine, concentrator plant
and associated infrastructure and services i.e. the Nokeng Fluorspar Project
("the Nokeng Project").
The acid grade fluorspar produced by the Nokeng concentrator will be used as the
sole feed to the Production Facility. The key technologies to be utilized in the
Production Facility will include the production of 50,000tpa anhydrous hydrogen
fluoride of which 8,000tpa will be available for sale with the balance, together
with the 93,000tpa sulphuric acid, 66,0000tpa oleum at a concentration of 20%
and feed of 108,000tpa acid grade fluorspar, will be used to produce 60,000tpa
aluminium fluoride. Due to the potential risks associated with transporting
hydrogen fluoride, almost all the produced hydro fluoric acid will be converted
to aluminium fluoride and only a small amount of diluted aqueous hydrogen
fluoride (<70% by volume) will be sold to offsite clients.
A high level financial analysis was performed by Venmyn to validate the
feasibility and opportunities associated with the specific products and
quantities to be produced by the Production Facility, as well as a review of the
market and the likely financial feasibility for each of these products. Since no
aluminium fluoride is currently produced in South Africa and a domestic market
to supply the aluminium smelters and planned nuclear enrichment facilities
exist, as well as a growing international market, the most apparent downstream
derivative products for the development of fluorspar would include aluminium
fluoride.
Sephaku Holdings, through Nokeng Mine, will be a major supplier of fluorspar
following the commissioning of the Nokeng concentrator in the first quarter
2012. The combination of local aluminium fluoride production and economy of the
supply will result in Sephaku Fluoride being one of the lowest cost suppliers of
aluminium fluoride in the market. Furthermore, Sephaku Fluoride will realize
additional profits from the local production of high quality fluorspar, as well
as from the highest quality aluminium fluoride, produced at the lowest operating
costs, using the latest technology.
A Market Assessment indicated that sufficient opportunity exists within both the
local and international (Middle East) markets for aluminium fluoride. In
addition, the quality guarantees by the technology supplier of the Production
Facility, Chemical Engineering and Consulting GmbH (Chenco), will ensure that
the aluminium fluoride product will be of the highest quality available in the
market, representing a clearly differentiated value proposition to customers and
Sephaku Holdings alike.
Venmyn determined a "fair" value and range of values as outlined in the table
below for the individual and combined facilities using:-
- a Calcium Fluoride sales price, free on board (FOB) from Durban, of
USD329.45/t, for any excess acid fluorspar not consumed by the Production
Facility;
- an internal transfer price (between the Nokeng Project and the Production
Facility) of USD214.14/t; and
- an aluminium fluoride sales price (FOB Durban) of USD1,799.00/t.
DISCOUNT VALUE
RATE (ZARm)
FACILITY "Fair" Upper Lower
Combined 10.0% 1,787.05 2,670.06 904.0491
Production 10.0% 1,671.41 2,140.52 904.049
Facility
Nokeng Project* 12.0% 279.338 365.515 193.161
*The value of the Nokeng Project was based on the
October 2009 Nokeng Mine Competent Person`s Report
which was prepared in compliance with the SAMREC and
SAMVAL Codes by Venmyn, a company which is independent
of the Sephaku group. Venmyn has approved the release
of this information in writing.
Pretoria
29 January 2010
Sponsor
QuestCo Sponsors (Pty) Limited
Date: 29/01/2010 17:00:01 Supplied by www.sharenet.co.za
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