Whale Head Minerals – Heavy Mineral Sands Operation

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Whale Head Minerals – Heavy Mineral Sands Operation – Walviskop, Alexander Bay, South Africa

Kazera owns 60% of Whale Head Minerals (“WHM”), a Heavy Mineral Sands (“HMS”) operation at Walviskop, Alexander Bay, South Africa.  Tectonic Gold (TTAU) holds a residual 10% interest and 30% is held by Black Economic Empowerment Partners as required by South African law.

The potential for HMS within the vicinity of Alexander Bay/Port Nolloth was recognised in 2016.  However, access to these deposits was made difficult by their proximity to the highly protected diamond mining areas on the West Coast.  These HMS deposits contain substantial diamond deposits which means that HMS miners cannot get permission to mine them.  For diamond miners however, the cost of extracting diamonds from material with the geological profile of the HMS made diamond mining of the area economically unviable.

Kazera has overcome these issues.  Deep Blue Minerals (“DBM”), another subsidiary of Kazera operating in the same Alexander Bay area, already held a Permit from Alexkor to mine diamonds.  Meanwhile, WHM applied for and was granted a licence to mine HMS.  This gave Kazera the unique opportunity to produce and sell both resources while also creating efficiencies by harmonising the operations of both subsidiaries.

In 2020, Creo Design (Pty) Limited (“CREO”), which undertook the initial competent persons report and resource estimate, calculated that WHM had a Net Present Value (NPV) of £150m based on expected production of circa 6,000 tons of HMS per month, applying a 20% discount rate.

In August 2022, the granting of an HMS Mining Permit to WHM allowed the commencement of construction of an HMS processing facility at the site. The permit gave WHM the right to mine a 5 hectare beach sand deposit at Walviskop with a JORC Indicated Mineral Resource of 3.11 million tons of Valuable Heavy Minerals at a grade of 61.2%. This was made up of Garnet (30.29% Run of Mine (“ROM”)) and Ilmenite (27.54% ROM), with Zircon and Rutile also present but not included in any of the Company’s modelling.

In December 2022, WHM commenced initial limited basic production of HMS to help inform the design of a more comprehensive processing facility and, in February 2023, the Company placed an order for the manufacture of equipment, in particular, a specially designed centrifugal separation screen.

Whilst awaiting the build and delivery of the screen, the Company introduced a double-deck 500-micron screen with a view to accelerating production of the separated HMS product and commence building up stockpiles of HMS whilst identifying a site to dry material away from the moisture at the coast.  Work also commenced on building a spiral array, reconditioning pumps, building additional scalpers, screens, feed bins and conveyors.

In March 2023, the Mining Permit area was moved circa 100 metres to the west due to conflicts identified with the original permit coordinates.  This resulted in the updated Mine Permit being in the surf zone of the bay and not largely on the beach.  CREO estimated the resource volume for the updated permit location to be comparable in volume to the initial volume estimate under the original permit but at a grade of 49.9% total heavy minerals compared to the 61.2%.  This difference was explained by the wind playing a significant role in removing light sand grains from the beach within the original permit area, and so enriching the heavy minerals deposited there.

However, the Company recognised that a major benefit of the revised permits was that the volumes in situ are largely irrelevant, as is the 5-year Life of Mine under the original permit area, given that wave action constantly replenishes HMS in the updated permit area, whilst also rehabilitating the mine site.

The proposed mining method used at the updated WHM permit area will remain a dredging operation as originally planned.  With the entire resource being submerged, mining at the revised permit area is not dependent on, or hindered by, the tidal state and with dredge pumps able to deliver high volumes of raw material than an excavator, it will be possible to achieve higher production levels, at lower unit cost per ton mined.  Consequently, the revised permit area has the potential to outperform the HMS production volumes of the original permit area.

Extensive testing has revealed very promising results, allowing the Company to determine the make-up of its HMS and further guide refinements in the design of its full separation processing plant. 

Samples and test results also formed the basis for informed strategic discussions with industry experts and off-take partners on the short and long term potential of the Company’s HMS.  From these discussions, initial findings suggest that the Company’s HMS has a heavy mineral content of approximately 62%, with around 55% of the resources classified as “saleable heavy minerals”.  WHM’s HMS is believed to be one of the highest grades in the world.

Indicative pricing for the basic (unseparated) product is $160 per ton, but the Company established that by undertaking further separation, it could be expected to achieve a price of approximately double, whilst transport costs would remain the same.

Unfortunately, progress to full production has been delayed by the detection of slightly elevated levels of radioactivity within the gravels.  It is not uncommon for HMS to contain radioactive elements and the Company has applied for and is awaiting the necessary Permit from the National Nuclear Regulator.  It is anticipated that authorisation will be granted during the first quarter of the 2024 calendar year.  Meanwhile, the time is being put to good use by further optimising the metallurgy and process design to maximise recoveries once production begins.

It is estimated that the resource, once fully operational, which is expected to be achieved during the course of 2024, may generate gross profits of circa US$300,000 per month.

Kazera is actively pursuing mining rights over additional areas with known HMS deposits.

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Kazera Global plc is an investing company listed on AIM, focused principally, but not exclusively, in the resources and energy sectors.

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Kazera is an investing company, focused principally, but not exclusively, in the resources and energy sectors. The Company is listed on London’s AIM market (ticker: KZG).

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