Major investment boost for Newcastle as metals one backs power-and-gold project

Newcastle may soon see one of its biggest industrial investments in years — a welcome development for a town still recovering from the closure of ArcelorMittal’s steel works and the loss of thousands of jobs.

According to the Investment News Network (INN), UK-listed exploration firm Metals One has announced a strategic investment of up to US$1.8-million in Lions Bay Resources (LBR), a South African company developing a major power and gold-processing project in the Karbochem Industrial Park.

INN reports that LBR has secured an option over a large cogeneration plant in Newcastle, which could be refurbished to produce steam, power and roast refractory gold concentrate — a service currently outsourced to smelters overseas.

The plant, previously verified with a replacement value of nearly US$40-million, includes two 30-tonne-per-hour boilers, a 6MW turbine, coal and biomass feed capacity, a boiler house, turbine and control centres.

“Subject to a final technical report, the plant is expected to require around US$4.5-million to restart full operations,” INN noted.

A neighbouring chrome smelter is already in discussions over a potential power and steam off take agreement, which could provide immediate revenue once the plant comes online.

LBR plans to reconfigure part of the operation to build a gold concentrate roasting complex, creating an alternative to exporting South African gold concentrate to Asia. This could attract feed from numerous gold deposits and tailings within a 300km radius.

INN says the company is also eyeing acquisitions of regional gold assets to supply the roaster.

Many smaller deposits and tailings projects — unable to fund standalone infrastructure — could benefit from a centralised roasting hub in Newcastle.

Metals One will finance the project through convertible loan notes, issued in stages once technical and legal requirements are met. If the full US$1.8-million is advanced, Metals One could ultimately secure at least 30% ownership of LBR.

The notes will earn 10% interest and are secured by first-ranking security over LBR’s assets.

INN quotes Metals One managing director Dan Maling as saying South Africa remains a world-class gold jurisdiction ripe for revitalisation.

“South Africa has the perfect ingredients of abundant resources, infrastructure and mining expertise to become a leader once again,” said Maling via INN.

“With the acquisition of the gold roaster and associated infrastructure … LBR has the foundations to be a significant, vertically integrated South African gold company.”

However, a local analyst in the private mining sector who preferred not to be named told the Advertiser that the road ahead may be far from straightforward.

“Everything hinges on that co-gen — the high-demand processes simply cannot run off expensive Eskom power.”

He added that while projects of this scale attract global interest, the reality is often less certain.

“There’s a very sophisticated international market for buying, selling and trading projects like this. In many cases, the projects never actually materialise, even though a lot of money moves around along the way,” he said.

Regulatory and funding barriers also remain significant. The same expert noted that funders would need to justify “an additional 30% of capital expenditure purely for BEE requirements,” and that any future operator would need to factor in the ongoing cost of complying with the Employment Equity Act.

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