Australia's junior explorer TPL Corp has received approval from Zimbabwe Investment Authority (ZIA) to acquire a 70-per cent stake in African Chrome Fields Pvt Ltd, (ACF), which owns a number of high-grade eluvial chrome deposits in Zimbabwe, the mineral-rich nation in southern Africa.
ACF is currently owned by Zimbabwean-registered Farvic Consolidated Mines Pvt Ltd and further to TPL's acquisition of the 70-per cent interest Farvic's stake will get diluted to 30 per cent.
The approval carries a string of conditions which include TPL's funding of all exploration, and upon start of production, all development expenses through secured loans and repayment of the loans on priority.
Besides, Farvic will have the right to buy back 21-per cent equity interest in ACF at a later date.
Chromium is a metal with high corrosion resistance and hardness. In various forms, it finds application in making steel alloys, dyes and pigments, as wood preservatives, in tanning, creation of synthetic ruby and several other uses.
Under the deal, TPL has to make its equity investment in ACL by 30 June 2014 and provide quarterly updates to ZIA on the development of the existing assets and future ferrochrome smelter.
ACF's high-grade chrome deposits and a processing plant are located along the prolific Great Dyke, a remarkable mineral-rich rock formation in the African continent.
The company plans to restart the chrome mine and processing plant in the first quarter of 2014 and sell the chrome concentrate domestically or abroad if it receives an export quota. TPL said that it would progress its application to receive a quota to export a fixed tonnage of chrome concentrate.
The existing operation at the Chniyika concession was capable of processing some 30,000 tonnes per month of ore to produce about 3,000 tonnes per month of chrome concentrate.
In the longer term, TPL intends to use the profits from its exports to finance reconstruction of a high-grade ferrochrome smelter subject to feasibility studies.
TPL is expected to meet its shareholders in the coming days to seek approval for the investment in Zimbabwe.
Perth-based TPL has extensive coal exploration project in the Canning Basin, in Western Australia covering an area of over 8,000 sq.km.
Zimbabwe has a century-old mining history and there are known occurrences of over 40 minerals in the country.
It has the world's second-largest platinum and chrome deposits after South African and also has large deposits of gold, diamond, nickel, coal and iron ore.
Global mining giants operating in Zimbabwe include Anglo American Platinum Ltd, Impala Platinum Holdings Ltd, and Rio Tinto Plc etc.
Under Zimbabwean law, all operating companies must be either 51 per cent owned by indigenous entities or have the capability to be 51 per cent owned.