Terramin Seeking to Tap China Funds for Algerian Zinc Project

Tuesday, May 05, 2009

Terramin Australia Ltd., an Australian zinc and lead producer, will start financing talks in China next month for its planned $266 million Tala Hamza zinc and lead mine in Algeria.

China Nonferrous Metal Industry Foreign Engineering and Construction Co., which bought an 11 percent stake in Terramin last month, “will be introducing us to their various backers,” including China Development Bank Corp., Kevin Moriarty, chief executive officer of the Adelaide-based company, said today.

China, the world’s biggest buyer of metals, may spend more than $500 billion on overseas resources investments over the next eight years to secure supplies, according to Deloitte Touche Tohmatsu. China Nonferrous wants to boost its holding and participate in new ventures, Moriarty said.

“We don’t envisage any problems with financing the construction, and nor do our new partners,” Moriarty said in an interview in Melbourne, adding that he and Chief Financial Officer Martin Janes are due in China in the middle of next month for a variety of meetings. China Nonferrous “are keen for us to look and acquire more projects so they want to back us,” he said.

Terramin, which started production from its Angas zinc and lead mine in South Australia state last July, was unchanged at 64.5 cents at 11:35 a.m. Sydney time on the Australian stock exchange. The stock has risen 43 percent this year.

Zinc has increased 17 percent this year and jumped 5.3 percent to $1,411.50 a metric ton yesterday on the London Metal Exchange. A “strong price recovery” in zinc is expected later in 2009 and through to 2010, Royal Bank of Scotland Group Plc said this week. Demand for zinc is estimated to grow 6 percent a year from 2010 to 2012, RBS said.

2011 Start

Tala Hamza is scheduled to start output by late 2011 and is expected to initially produce 250,000 tons of zinc and lead concentrate, Terramin said in an April 8 statement. Output is expected to increase to as much as 500,000 tons a year, the statement said. Commodities trading company Transamine has agreed to sales accords from the mine, Moriarty said.

The timing of building Tala Hamza “is totally spot on, we want to be bringing it in as the next high-cycle begins and not during it,” Moriarty said.