JOHANNESBURG. - The Kalagadi Manganese project - now a joint venture between Kalagadi Manganese and ArcelorMittal - is of "enormous £¦#118alue" to Metmar (JSE:MML) which holds a 4% stake in the project and a 10% stake in Kalahari Resources. Kalahari Resources owns 80% of Kalagadi Manganese.

Metmar CEO David Ellwood told the Moneyweb Power Hour on Radio 2000 the company (Metmar) has always highlighted its shareholding in Kalahari Resources to investors but could never put a £¦#118alue on it.

However, the latest announcement of ArcelorMittal's 50/50 equity partnership with Kalagadi Manganese to develop a manganese mine and sinter in the Northern Cape and smelter in the Coega Industrial Development Zone implied that Metmar shareholders owned 4% of the total project, which amounts to R170m. Metmar is currently trying to strengthen its position in Kalahari Resources.

Ellwood commented on the £¦#118alue by saying: "Ja, we're nearly there. Nearly finished scratching the surface."

Metmar intends to market manganese from the project when it comes on stream. The 50% offtake agreement that ArcelorMittal has secured through the partnership has put Metmar in a very comfortable position. In terms of the agreement half of the project's production would even be sold during tough times.

Ellwood said it was a "very, very strong" offtake agreement the company had for financial institutions that might participate in the project at a later stage.

Metmar has walked a long road with the Kalagadi project and it has finally brought £¦#118alue to the table. A bankable feasibility study of the project had to be brought to a certain point, before Kalagadi Manganese was awarded its mining licence last week.

ArcelorMittal yesterday announced it would buy 50% of the project for around R2bn from the original Kalagadi shareholders. Both ArcelorMittal and Kalagadi will commit an equity portion to the R4bn project.

The project is in the Kalahari Basin which holds 80% of the world's high-grade manganese ore reserves.

"It is important to say high-grade reserves. There is lots of manganese around the world, but a lot of it is uncommercial, in today's terms, to mine," said Ellwood.