Kennedy Senelwa
10 November 2009
Nairobi — Tiomin Resources Inc posted a loss of Canadian $31.3 million (Sh2.191 billion) after failing to sell a majority stake in its titanium exploration project in Kenya.
The company said the loss for the period ended September 30, 2009 is as a result of termination of investment agreement signed with Jinchuan Group Ltd of China on August 27 this year.
The latter at the end of last month announced that it had ended a deal to buy a 70 per cent controlling stake in Tiomin Kenya Ltd that owns 100 per cent of Kwale mineral sands project in the Coast region.
Tiomin's chief executive Robert Jackson said Jinchuan was to purchase the stake by investing $25 million thus termination of deal led to temporary impairment of the project.
He said Tiomin had written off costs of C$30.3 million (Sh2.1 billion) related to the project and reversed party amounts related to Jinchuan and long-term loan with Canadian International Development Agency.
"The termination of the investment agreement has resulted in another temporary impairment and thus the decision to write off the project," he said in a press statement.
Mr Jackson said the Toronto-based firm was considering alternatives for Kwale project by continuing to seek a company involved in transactions consistent with Tiomin's strategy of combining strong cash positions with good assets or good quality exploration properties.
In 2006 Tiomin raised more than $200 million in debt and equity to build the Kwale project.
The firm in a 2006 evaluation projected initial annual sales of $70 million, capital spending of about $200 million and production of 330,000 tonnes of ilmenite, 75,000 tonnes of rutile and 40,000 tonnes of zircon.
Jinchuan's output of nickel and platinum metals accounts for over 90 per cent of China's total production.
The company said "it was not satisfied with disclosure schedule" two days before Tiomin's shareholders were to meet on October 29, 2009 to approve the transaction.
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