Chromex Mining plc - Zimbabwe Acquisition and Market Update

Chromex Mining plc / Epic: CHX / Market: AIM / Sector: Mining & Exploration
10 November 2009
Chromex Mining plc ('Chromex' or 'the Company')
Zimbabwe Acquisition and Market Update

Chromex Mining plc, the AIM listed chrome mining company focussed in Southern Africa, is pleased to announce that it has concluded a binding Heads of Agreement to acquire 49% of Falvect Mining (Private) Limited ('Falvect'), a company owned and operating in Zimbabwe for a nominal consideration, and provide an update on its activities in South Africa.

Under the terms of the acquisition, Chromex will have the exclusive right to co-develop all Falvect chrome concessions in the Shurugwi region and tribute agreements in the Ngezi area, and market 100% of the chrome products produced from those operations. In return, the Company will provide working capital into Falvect and funding for the development of current projects and any additional acquisitions in Zimbabwe, which is host to significant high grade chrome ore deposits.

A technical review of the contained mineralisation will commence once final agreements have been concluded. In line with the development of its business, Chromex is already investigating the economics of setting up beneficiation facilities in Zimbabwe.

In South Africa the commissioning of the first phase of its Stellite chrome beneficiation plant was completed in August 2009. By the beginning of November 2009, this facility was able to operate at full design capacity, producing 42% and 44% metallurgical grade chrome concentrate. All beneficiation to date has been fed from existing stockpiles at the Stellite mine, although due to on-going demand, the Board expects to recommence mining operations in December 2009.

Furthermore, the Company is currently finalising the design and costing of Phase 2 of the current beneficiation plant to include a dense media circuit with the ability to double current beneficiation capacity. Importantly, in addition to the capacity increase, Chromex will be in a position to market a sized lumpy chrome product in addition to the chemical and metallurgical grade concentrates that it currently produces.

On a more general level, 2009 has been a difficult year for the South African chrome industry, combining general macro-economic uncertainty with unprecedented turbulence in demand and price. In addition the South African mining industry has been significantly impacted by a very strong Rand, increasing costs and continuing power constraints.

In spite of this Chromex has continued to spend capital on its beneficiation facilities and mine, and will continue to do so in the future so as to retain operating flexibility in an ever-changing environment. Its strategy remains to produce enough chrome to provide positive cash flow, while retaining valuable chrome resources in the ground pending an upturn in prices.

Additionally, the challenge to the Group's mining right at Mecklenburg remains unresolved, largely due to delays in the process of providing evidence for the court. Chromex has complied with all requirements within the stipulated time scales, and, on the basis of our legal advice, the Company remains confident of a successful outcome.

Chromex CEO Russell Lamming said, "The investment in Falvect is in line with our strategy of building a broad portfolio of chrome and related mineral assets across southern Africa. The timing of the acquisition is linked to the lifting of the Zimbabwean ban on exports of chrome ore and fines, effective 1 November 2009 and will hopefully allow us to expand our production capabilities going forward. In spite of the challenging chrome market we have continued to invest in our operations and have a producing mine and operating beneficiation plant. Our aim is to continue to build our business, expand on our portfolio and generate value for shareholders going forward."



For further information please visit www.chromexmining.co.uk

Chromex Mining, quoted on AIM, is a dedicated chrome mining company with two primary projects on the Bushveld complex, South Africa and approximately 41Mt resources under its control. The Company has commenced production at its Stellite project on the Western Limb of the Bushveld complex, and plans to commence production at its Mecklenburg project on the Eastern Limb as soon as possible.

HUGIN /Source: Chromex Mining PLC /LSE: CHX /ISIN: GB00B16QP362