Further to the press release of 8 July 2015, over the last month Melior Resources Inc. has successfully implemented its reduced time strategy operating at 50% of the available calendar hours at its wholly-owned Goondicum project.
This strategy has allowed the Company to continue to progress with the ramp-up of the operation to full design capacity. Since start-up in April, the Company has significantly de-risked the operation through:
- Total production in excess of 18,000 tonnes of ilmenite since April 7, 2015
- First cargo of 6,600 tonnes of on-specification product successfully shipped to customers
- On target production of apatite by-product at better than target specification quality
Notwithstanding the successful commissioning performance to date, in light of the weak ilmenite market the Company considers that it is in the best interests of shareholders to pause production now, having significantly de-risked the operation prior to full-scale production, by placing the Goondicum project on care and maintenance.
Melior has today entered into a secured loan agreement with Pala Investments Ltd to borrow up to an aggregate of US$5 million. The loan may be prepaid by the Company prior to its maturity date without penalty and will be secured over the assets of Melior and its subsidiaries. The proceeds of the loan will be used to for general working capital purposes at Melior and the Goondicum operation during the temporary period of non-production as well as being sufficient to support the anticipated re-start of the operations in stronger market conditions. With this funding support in place, there is currently no anticipated equity funding required to support the eventual restart of the operations.
Having significantly de-risked the operating parameters of the business, and having a flexible operation that can efficiently be restarted within available cash resources, the Board believes that pausing production now is a better solution than entering into potentially long-term low-priced sales contracts.
During this period of suspended operations, Melior will continue to progress with the permitting of the eastern access road and ensuring that when the restart occurs that the Company has the opportunity to reduce haulage costs to the Gladstone port by more than A$15 per tonne.