By Dr. Michael Green

Further evidence emerged this morning which shows that the wheels are in motion to secure Kazera’s economic future. Today’s RNS provided investors with a pretty bullish update concerning the first commercial export of tantalum, along with the installation of a Pan Plant at the alluvial diamond business. All of this points towards a strong and growing cash flow,  the elusive holy grail of small cap resource stocks.

There seems to have been big improvements at the tantalum project and the plant is now producing a product with an acceptable grade. This means that Kazera is now in a position to export its first commercial delivery of tantalum to its Chinese partner. Volumes haven’t been as high as hoped but the company has plans to upgrade the plant to improve productivity and increase reliability, which should serve to significantly improve tantalum production over the next two months.

The initial delivery looks like it will be 1,000kg of concentrate in size and will be shipped by air, containing 250kg of tantalum. Looking ahead, this first delivery is expected to open the door to regular monthly shipments of the magical 4,000kg of concentrate which could net Kazera a decent amount on a monthly basis.

If that wasn’t enough, an enviable cash flow now looks on the cards at the alluvial diamond operation at Alexkor in South Africa. This is due to the successful installation and commissioning of the Pan Plant in the company’s diamond mine in South Africa. This Pan Plant is capable of processing up of 70 tons of gravel per hour and so has the capacity to quickly deal with the gravel stockpiles that the company has built up but has not been able to process. Truth is that they have mountains of gravel to be processed as the team has carried on mining even through the long history of breakdowns and disappointments with the processing plant at Alexkor.

Best of all, this new facility will give the company complete control over its diamond production, with Alexkor only being responsible for final sorting and sales. The Pan Plant has arrived on site via a very neat deal whereby it has been supplied by a third party which will only be paid out of diamond sales. The cost will be less than the company was paying Alexkor. Plus, there is also the opportunity for other contract miners to use the Pan Plant when not being used by the company, which will serve to reduce operation costs further.

Also, investors were updated on the continuing saga of the Heavy Mineral Sands (HMS) Permit which the company has been granted. The story here is that no one had ever twigged the potential of the HMS in the diamond fields at Alexkor. However, once the permit was granted to the company then others tried to muscle in on the action as it looks like it is going to be a big money spinner.

Today the company confirmed that the board remains confident that the Department of Mineral Resources and Energy have followed the appropriate procedures in initially granting the Permit, and that its decision will be upheld. That said, the company is still waiting for a decision from the relevant Minister.

In this latest announcement Kazera’s CEO Dennis Edmonds had this to say “Having got our grades to where we want them, we can now work on substantially boosting Tantalum production in the near future. Exporting our first commercial batch of Tantalum is great news and will considerably boost the morale of both shareholders and our team in Namibia, as well as generating revenue. The introduction of the Pan Plant, on such favourable commercial terms, into our diamond operations gives us considerable independence and removes much of the uncertainty that has previously plagued our diamond operations. I expect that they will now become a regular contributor to the Company’s bottom line, so that the South African operations will no longer require funding from Kazera.”

There is no doubt that rapid progress is being made right across each and every one of Kazera’s operations – and now there is the added excitement of REE to come as well. Going forward it looks as though the news flow won’t disappoint.

The granting of the HMS Mining Licence could practically come at anytime. The new REE interests could see a JORC-complaint resource for Buru Hills announced by the year end, which has the potential to generate a big re-rating of the shares in our view.

We initiated coverage on Kazera with a Conviction Buy stance in August 2020 at 0.70p with a target price of 2.50p and very much look forward to revisiting this valuation/target price to reflect the dramatically changing fortunes of the company over the past year or so. 

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