Kabanga Nickel Limited, the company that is developing the homonymous nickel mining project in Tanzania, recently announced that BHP, a world-leading resources company, has invested USD 40 million into the project.
The money will be used to accelerate the development of the Kabanga Nickel Project, the world’s largest development-ready nickel sulfide deposit.
In parallel, BHP will invest USD 10 million into Lifezone Limited to advance the roll-out of its patented hydrometallurgical technology.
This provides a greener, lower emission, and higher margin product and will allow full beneficiation of metals in-country, and will ensure that Class 1 battery-grade nickel, copper, and cobalt will be produced in Tanzania.
Chris Showalter, Kabanga Nickel CEO, said: “BHP is the ideal partner for Kabanga Nickel, bringing significant advantages and expertise that will enable us to move ahead with the project. In addition, BHP’s funding support of Lifezone’s hydrometallurgical technology will drive progress towards a greener world. Through the development of Kabanga and Lifezone hydrometallurgical technologies, Tanzania will have a growing role in the supply of the battery metals needed to move to a global low carbon economy.”
Details of BHP’s Investment in Kabanga Nickel
The Kabanga project is currently owned by Tembo Mining Limited of which Kabanga Nickel owns 84% and the Government of Tanzania the remaining 16%, in accordance with current mineral legislation.
BHP will invest, all in all, USD 90 million in unsecured convertible securities in Kabanga Nickel in two tranches: an initial USD 40 million, followed by a further USD 50 million on successful agreement of definitive documentation and satisfaction of certain other conditions.
The first tranche of USD 40 million will convert into an 8.9% equity stake in Kabanga Nickel (7.5% see-through interest in Tembo Nickel Corporation) once approvals and conditions are met.
Once invested and on conversion the second tranche of USD 50 million will increase BHP’s equity stake in Kabanga Nickel to 17.8% (15.0% see-through interest in Tembo), thereby valuing the project at USD 658 million post-money.
On satisfaction of additional conditions, BHP will secure the right to make a further investment in Kabanga Nickel subject to achieving certain agreed milestones.
The mining of nickel in Tanzania is still in its infancy. However, the Kabanga Nickel Sulfide Deposit is one of the largest and richest undeveloped nickel sulfide deposits known at present, of unmatched scale and grade.
The current project development timeline anticipates the first production in 2025. The output will ramp up to target a minimum annual production of 40,000 tonnes of nickel, 6,000 tonnes of copper, and 3,000 tonnes of cobalt.