UK Company Strikes Multi-Million Deal To Mine Rare Mineral In Kenya

Marula Mining (AQSE: MARU) a United Kingdom (UK)-based African-focused mining and development company, on Friday, March 1 announced that it signed a binding terms sheet with Kenyan manganese mine operator Gems and Industrial Minerals Limited (GIM) for commercial interest in the Larisoro Manganese Mine located in Samburu County, Northern Kenya.

The Larisoro Manganese Mine is a conventional and shallow open pit mine which commenced operation in 2012 and has operated intermittently over the past 12 years on two granted and adjoining mining permits.

Mined manganese ore has ranged from 18.82 per cent manganese (Mn) to up to 55.01 per cent and has averaged 33.41 per cent over the past 6 years.

It is crushed and screened to produce a +37 per cent Mn saleable product that has historically been sold into the Asian markets.

A photo of Manganese mineral. /BRITANNICA

Under the new deal, Marula will invest in an established manganese mining operation in northern Kenya and secure an initial 60 per cent commercial interest with an option to increase to 70 per cent.

The current operation consists of three shallow open pits that extend over a cumulative length of approximately 600m and which have mined the highly visible and outcropping surface manganese mineralisation by conventional drill and blast and load and haul open pit mining  operations down to very shallow depths of between 1.5 metres and 12 metres

Site inspections by the Company’s technical team of the current open pit operations indicate that the manganese mineralisation appears to remain open down-dip and along the strike.

Current processing equipment crushes and screens the run-of-mine ore to +60mm sizing and targets production of +37% Mn saleable product – which is considered the benchmark medium-grade product in the international markets – and which the current mine operators have sold into the Asian markets with exports through port facilities at Mombasa.

Meanwhile, on signing the Term Sheet, consideration of Ksh55.8 million (£300,000) became payable to GIM to be satisfied through the issue of 2.4 million new ordinary shares in the company at a price of Ksh2,324 (£12.5) per new ordinary share. 

Marula Mining in a press statement sent to Viral Tea revealed that the Term Sheet provides that subject to GIM entering into a Technical Support Agreement (TSA) and a Commercial Agreement (CA) Marula will provide an investment of Ksh220.5 million (US$1.5 million) for new mining, crushing, screening and processing equipment.

This will increase monthly manganese ore production to between 5,000 tonnes and 10,000 tonnes of saleable high-grade manganese ore over the next 3 to 6 months. The TSA and CA are expected to be signed in mid-March 2024. 

"On signing the TSA and CA, the Company has agreed to pay GIM and its nominees a sum of Ksh37.2 million (£200,000) to be satisfied in new ordinary shares or in cash.

"A further £300,000 will be payable to GIM on completion of the initial exploration program and a final payment of £750,000 (Ksh139.5 million) will become payable on achieving 50,000 tonnes of commercial sales of manganese ore," read the statement in part. 

Furthermore, the Term Sheet provides that Marula will be granted an option (exercisable for 12 months following the signing of the TSA and the CA) to increase its commercial interest in the mine to 70% through a further payment to GIM of Ksh232.4 million (£1,250,000) in cash or shares, at the Company’s election. 

The Company added that has already completed a detailed due diligence work program, which it added confirmed the potentially high-grade nature of the manganese mining operation, with independent assay and export reports confirming the high-grade nature of the manganese, the established mining and processing operations, and the opportunity to materially expand production to the initial targeted levels through major investment in new mining and processing equipment.

Marula Mining Chief Executive Officer (CEO) Jason Brewer expressed confidence regarding the investment in GIM and the Larisoro Manganese Mine following a successful site visit made in late 2023, and a very thorough technical assessment and review.

“With its historical high-grade assays, production history, established operations, an existing stockpile of material, and the interest we have already received for offtake and marketing of the planned increased manganese production, we are pleased to proceed with this investment, which we believe is firmly in line with our strategy here in Kenya and East Africa and firmly in the battery metals sector. 

“This marks our first investment in Kenya’s mining sector and is ahead of its planned dual listing on the  Nairobi Securities Exchange which the Company anticipates completing in due course. This is an important milestone for us, as we continue to establish Marula Mining to be an African-focused mining and development company in the battery metals sector," he stated.

Marula, which is eyeing listings on the Nairobi and Johannesburg securities exchanges, has operations in Kenya, Tanzania, South Africa, Zambia, and Zimbabwe with projects extracting rare earth, tantalum, lithium, niobium, and phosphate across its operational mines.

In May 2023, the company established a subsidiary in Nairobi to explore mining opportunities in copper and graphite, in response to the demand for rare earth metals which has been skyrocketing globally as the world transitions to more sustainable and climate-friendly options for energy.