Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
A consortium of marquee mining investors are backing Lifezone Metals (NYSE: LZM) and the development of its flagship Kabanga project in northwest Tanzania, which it said is on track to reach the definitive feasibility stage later this year.
On Thursday, an investor group led by Harry Lundin (Bromma Asset Management) and Rick Rule signed a binding agreement with the company for a $50 million debenture financing. The debentures will bear annual interest equal to the secured overnight financing rate (currently 5.3%) plus 4%, and are convertible into Lifezone’s common shares.
The nickel developer went public last July following a business combination between special purpose acquisition company – GoGreen Investments – and Lifezone Holdings Ltd. At the time, the combined entity was valued at $1 billion by the SPAC.
The New York-listed Lifezone pairs one of the world’s largest and highest-grade undeveloped nickel sulphide deposits in Kabanga with a proprietary processing technology, known as Hydromet, to produce cleaner metals in support of growing demand for batteries.
The company acquired the rights to the Kabanga project in early 2021, and in the same year, was awarded a mining licence by the Tanzanian government, a key partner on the project alongside BHP, which has committed financial backings of $100 million.
Kabanga’s previously owners include Barrick Gold and Glencore, which had spent $293 million on exploration prior to having their retention licence revoked in 2018.
Since taking over, Lifezone continued with drilling at Kabanga, leading to high-grade discoveries and a significant mineral resource update in late 2023. The deposit is now estimated to contain 881,000 tonnes of nickel metal within 43.6 million tonnes of measured and indicated resource grading 2.02% nickel. Another 391,000 tonnes (17.5 million tonnes at 2.23% nickel) are in the inferred resource category.
The company also made advancements in the metallurgical refining testwork using its Hydromet technology, which is said to have lower carbon footprint than the conventional pyrometallurgical smelting method. Test results showed nickel recoveries of over 98.5%.
On the same day of the $50 million financing, Lifezone announced it has received a multi-metals processing licence from the government for its facility at Kahama, located approximately 340 km southwest of Kabanga.
The site, situated within a newly established special economic zone, stands to benefit from the legacy infrastructure of Barrick’s former Buzwagi gold mine nearby.
With the licence, the company will be able to produce finished metals in-country, potentially reducing capital and operating costs, as well as reducing costs associated with transport of concentrate or other intermediate products.
“With the receipt of our Kabanga special mining licence, and now the Kahama refinery licence, we have a clear path to delivering a direct-to-metal solution and enabling the production of nickel, copper and cobalt in Tanzania,” Lifezone CEO Chris Showalter said in a news release.
Shares of Lifezone Metals gained 3.2% to $8.19 by 10:00 a.m. Friday in New York, giving the company a market capitalization of $639.3 million.
