Australian mining company Canyon Resources, whose Cameroonian subsidiary Camalco was established as part of the Minim-Martap bauxite mining project, has released a bankable feasibility study carried out by its strategic partner MCC-CIE detailing the financing of various aspects of the project. . One aspect concerns the implementation of development projects, the study of which estimates funding at 176 billion FCFA. This envelope will be used for the development of certain infrastructure in the mining area; development of internal railway communication; financing of road transport, among other things.
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Specifically, the trains planned to transport bauxite will be extended from 600 to 1,200 m per train, new carriages and locomotives will be purchased and then handed over to the Cameroon Railway operator (Camrail) at the end of the project. A memorandum of understanding was also signed on April 13 between Canyon Resources through Camalco and Camrail. The above package also plans to invest FCFA 13.516 billion in the Autonomous Port of Douala to develop a terminal dedicated exclusively to bauxite loading operations. A rail line will also be built inside the port to facilitate transportation to the terminal in question. Funding for these projects will come from a strategic agreement signed in August 2021 between Canyon Resources and China Zhongye Changtian International Engineering Corporation (MCC-CIE). The entity, controlled by China Minmetals Corp, also confirmed its commitment to the Australian junior mining company in a letter sent on March 25, 2022 to Cameroon Prime Minister Joseph Dion Ngute. “(MCC wants to) reaffirm its full support for Canyon Resources and the project. We wish the project success in the near future thanks to the efforts of experienced professionals, serious technical expertise and MCC’s help in financing the project,” he wrote in the Chinese company.
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Indeed, the agreement between Canyon Resources and MCC-CIE provides that “subject to good cooperation between the parties during the BFS (Banking Feasibility Study), Canyon and MCC-CIE will enter into a comprehensive strategic partnership. MCC-CIE, as a strategic partner, will provide the necessary assistance to Canyon to facilitate the attraction and financing of the project in China. MCC will also provide all necessary support to assist Canyon with technical, commercial and financial issues, etc. “, – reads the press release published by Canyon Resources in August 2021.
The main provisions of the mentioned agreement provide that, as part of their strategic partnership, both organizations will jointly hold meetings to facilitate the financing and implementation of the project; MCC-CIE will provide Canyon with all necessary support within its capabilities to assist Canyon in resolving technical, business, acquisition and financing issues; the memorandum of understanding between CAY and MCC-CIE is extended until December 31, 2022; the parties agree to reach a more comprehensive legally binding agreement on the implementation of the project to replace the non-binding relationship established by the Memorandum of Understanding and the strategic one by the Partnership Agreement.
It should be noted that the feasibility study determined operating and capital cost estimates to within +/- 15% of the estimates used in the life-of-mine financial model to determine the economic aspects of the project.
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Sonamines will receive a 10% stake in Camalco
Following the granting of the Minim-Martap bauxite mining permit to Canyon Resources through its subsidiary Camalco, the National Mining Company (Sonamines) will be allocated 10% of Camalco’s shares in accordance with Article 59 of the Mining Code, which provides that “The granting of a mining permit shall result in to the allocation to the state of ten percent (10%) shares or equity shares of the management company, free ownership, free from any fees.
The state’s participation cannot be diluted in the event of an increase in the authorized capital.” The state can acquire these holdings directly or through a public sector company. If necessary, he has Sonamines, which is his secular division, to manage his mining resources. However, in addition to the 10% it will inherit, Sonamines can also subscribe for a 25% stake in Camalco. If necessary, he will be subject to the same obligations as all other shareholders.