Lifezone Metals Advances Kabanga Nickel Project Toward 2026 Final Investment Decision

• Lifezone Metals acquired BHP's 17% stake in Kabanga for deferred consideration ($10M at FID + $28M at commercial production), giving them 100% control of one of the world's highest-grade undeveloped nickel assets
• Feasibility study released July 2025 shows $1.6B NPV, 23.3% IRR, 4.5-year payback, with all-in sustaining costs of $3.36/lb (net of byproducts) at conservative long-term nickel prices
• Tanzania's new standard-gauge railway and grid connection with 95-98% availability solve historical infrastructure challenges; three new hydropower stations eliminate electricity shortages
• Advanced discussions with US DFC, European ECAs, and MSP partners position Kabanga as critical non-Indonesian nickel supply for defense, aerospace, and battery sectors
• $60M Taurus Mining bridge facility funds execution readiness through 2025 FID decision; targeting 60/40 debt-to-equity project financing for $950M-$1.2B capex with equity partnership

As global supply chains face increasing concentration risk, Lifezone Metals (NYSE:LZM) is positioning its flagship Kabanga nickel project in Tanzania as a Western-aligned alternative to Indonesian dominance. Chief Financial Officer Ingo Hofmaier detailed the company's progress following BHP's strategic exit, the project's compelling economics, and the pathway to a final investment decision (FID) by late 2026. With decades of exploration investment, newly released feasibility studies, and infrastructure improvements in Tanzania, Kabanga represents what many consider the world's best undeveloped nickel asset.

BHP's Strategic Exit & Transaction Economics

BHP's involvement with Kabanga began in 2021, when the mining major made two investments totaling $90 million for a 17% stake in the project. However, as Ingo explained, the company's strategic priorities shifted dramatically: 

"BHP decided to declare nickel as non-core. They wrote their nickel west operations completely off last year and then mothballed the operations and publicly selling what's probably valuable of it."

The exit, announced July 18, 2025, came with favorable terms for Lifezone. The company acquired BHP's entire stake with no immediate cash outlay. Instead, payment is structured as deferred consideration: $10 million due 12 months after FID, plus $28 million indexed to Lifezone's share price after declaring commercial production. This structure significantly de-risks the transaction from a cash flow perspective.

Despite losing a major partner, Ingo emphasised the relationship's value: 

"BHP was a great partner to have. There was lots of interaction not just from a financial investments perspective but connected to our team, steering committee and exchange of ideas." 

The exit reflects broader industry trends rather than project-specific concerns - BHP had multiple engineering teams and steering committees engaged with Kabanga before their wholesale retreat from nickel.

Project Economics: Tier-One Asset Quality

The July 2025 feasibility study marked a watershed moment for Lifezone, providing the first public financial analysis in the project's 50-year history. The numbers demonstrate why Kabanga has attracted consistent industry attention despite decades without commercial development.

The deposit contains approximately 50 million tons of reserves at 1.9-2% nickel grades, with valuable copper and cobalt byproducts. At conservative long-term nickel prices, the project generates a $1.6 billion after-tax NPV with a 23.3% IRR and 4.5-year payback period. All-in sustaining costs of $3.36 per pound (net of byproduct credits) position Kabanga well below current nickel prices and in the lower quartile of the global cost curve.

Capital requirements total $950 million to $1.2 billion when including capitalised operating and financing costs during construction. The 18-year initial mine life is conservative - step-out drilling has confirmed mineralization continues both along strike and at depth, with the Safari Link area returning grades above 2% nickel up to 1.5 years ago.

Financing Strategy: Project Finance and Strategic Partnerships

With BHP's exit, Lifezone has restructured its financing approach around project finance principles. The high-grade nature of the deposit supports substantial debt capacity, with the company currently targeting a 60/40 debt-to-equity split based on multiple rounds of lender discussions.

In August 2025, Lifezone closed a $60 million bridge facility with Taurus Mining, drawing down $20 million to date. This facility funds execution readiness activities, final engineering and design work, and the project financing process itself. Drawdowns occur on a rolling three-month forward spending basis, with certain conditions including finalization of the framework agreement with the Tanzanian government.

"We are in regular touch with European capitals, Washington and Tokyo through the MSP, the Mineral Security Partnership. We are very well advanced in due diligence exercises with several of them." 

Public disclosure confirms active engagement with the US Development Finance Corporation (DFC) and JOGMEC, with the DFC process having progressed through public consultation.

The company is also pursuing equity partnerships to cover its portion of construction capital. Retaining 100% of offtake rights post-BHP provides flexibility in structuring partnerships with battery manufacturers, stainless steel producers, or strategic metals offtakers in Canada and Northern Europe.

Interview with Chief Financial Officer, Ingo Hofmaier

Technology Differentiation: Hydrometallurgical Processing

Lifezone's competitive advantage extends beyond the deposit's grade to its proprietary hydrometallurgical processing technology, developed at the company's Perth laboratory. The approach offers significant improvements over conventional pyrometallurgical smelting.

Traditional smelting requires extreme temperatures (1,000+ degrees Celsius), consumes massive amounts of primary energy, and historically generated substantial sulfur dioxide emissions. 

By contrast, Lifezone's pressure oxidation process operates as a closed system at elevated temperature and pressure. The concentrate (upgraded from 2% to 17-18% nickel) feeds into pressure oxidation vessels with reagents. Critically, Kabanga's ore contains 30% sulfur, eliminating the need to purchase and transport sulfuric acid - a significant cost advantage over Indonesian laterite operations that must import sulfur at current high prices.

The hydromet process produces no atmospheric emissions and achieves high recovery rates through subsequent solvent extraction and electrowinning steps. The Perth facility, staffed by over 20 qualified engineers, has tested materials from numerous third parties including established producers, junior companies, and even seabed mining operations, positioning the technology for potential licensing opportunities beyond Kabanga.

Infrastructure: The Game-Changing Improvements in Tanzania

Historical skepticism about Kabanga centered less on geology than on Tanzania's infrastructure constraints. Two major developments have fundamentally altered this calculus.

First, Tanzania has upgraded its railway network from the port of Dar es Salaam to Lake Victoria with a new standard-gauge track capable of higher axle loads. The upgrade is being built in stages by international consortia, with initial sections already operational. "By the time we need that railway, that will definitely be in place," Ingo confirmed.

More critically, Tanzania's power situation has transformed. The country commissioned three new hydropower stations - one ultra-large facility and two smaller ones near Kabanga - creating electricity surplus where shortages previously existed. The project site now connects to the national grid with 95-98% availability, replacing diesel generators that previously powered the camp.

"Tanzania is expected to become an exporter of electricity in the next couple of years once they have gone through a maintenance cycle of the older ones now that the newer ones are coming on."

While high-voltage upgrades will be required for full-scale operations, these follow established patterns as the country builds out industrial capacity.

Geopolitical Positioning: Western Supply Chain Security

Lifezone's strategic value derives partly from nickel market concentration. Indonesian production, primarily Chinese-controlled, now represents 70-80% of global supply - a concentration exceeding OPEC's dominance in oil markets. For Western governments, particularly the United States, this creates unacceptable supply chain vulnerability.

Nickel's criticality spans both defense applications (high-temperature and corrosion-resistant alloys for aerospace and naval systems) and the energy transition (battery cathodes). The US has designated Indonesian nickel operations as involving forced labor concerns, while repeated tailings dam failures have created environmental disasters.

"Environmental concerns are one element but the key thing is that traceability of nickel sulfates that ultimately go through western smelters and end up in the defense industries or the stainless steel industry."

This strategic imperative drives engagement from the Mineral Security Partnership, which held meetings in Brussels recently. The MSP framework coordinates Western capital and offtake to support non-Chinese critical mineral supply chains. For Kabanga, this translates to concrete support from development finance institutions, export credit agencies, and downstream processors seeking traceable, responsibly sourced nickel.

Execution Roadmap: From Feasibility to First Production

Lifezone's near-term priorities center on execution readiness rather than additional geological validation. The deposit has absorbed $435 million in exploration and study work over five decades, with almost 600,000 meters of drilling. The July 2025 feasibility study - the first publicly released despite multiple predecessor efforts provides the foundation for final engineering and construction planning.

Current activities include tendering for major equipment and construction contracts, finalising project financing terms, and securing strategic partnerships. The Tanzanian government holds a 16% non-funding stake and has proven to be an "enabler" through the permitting process, with the mining license and most operational permits already secured.

"The FID readiness gets the organization from the exploration evaluation study phase to the execution phase; that's the most important thing."  

The company is scaling its team from approximately 80 people to meet construction requirements, drawing on personnel who previously worked on the project under predecessors Falconbridge and Glencore.

Underground mining methods are well-established for the deposit's geotechnical characteristics. Open stoping will extract ore from multiple deposits extending over 7.5 kilometers of strike. Despite being underground, the operation's scale is modest relative to production due to the exceptional grade - mining 3.4 million tons of ore produces over 300,000 tons of concentrate annually.

The timeline targets FID by late 2026, with first production following a construction period. The 4.5-year payback from first production reflects the project's robust economics even accounting for ramp-up periods.

The Investment Thesis for Lifezone Metals

• Tier-one asset quality: Kabanga ranks among the world's highest-grade undeveloped nickel sulfide deposits with 50 million ton reserve base at 1.92% nickel, 0.29% copper, 0.16% cobalt translating to 4.1% copper-equivalent grade and positioning in lowest cost quartile with AISC of $3.36/lb
• Strategic Western supply solution: Project addresses critical supply chain diversification objectives for US and allied nations seeking alternatives to Indonesian-Chinese dominance exceeding 75% of global nickel production, supported by Mineral Security Partnership and US DFC engagement
• Infrastructure de-risked: Historical development barriers eliminated through Tanzania's completion of 2.4GW Julius Nyerere hydropower project providing reliable grid electricity, ongoing standard gauge railway upgrades, and established Dar es Salaam port logistics reducing execution risk
• Advanced permitting and social license: Special Mining License and key operational permits secured with 95% community resettlement compensation complete, framework agreement with supportive government providing regulatory certainty uncommon in African jurisdictions
• Environmental differentiation: Hydrometallurgical processing technology using renewable power creates low-carbon, zero-emission pathway contrasting with Indonesian coal-powered smelting operations facing increasing ESG scrutiny and forced labor allegations, potentially accessing premium markets
• Clear path to development: Bankable feasibility study complete with first reserve declaration, $60 million Taurus bridge facility providing execution readiness funding, project financing structured around 60-40 debt-equity split with substantial lender interest, and FID targeted for late 2025
• Exceptional project economics: $1.6 billion NPV (8% discount) with 23.3% after-tax IRR based on conservative metal price assumptions, 18-year mine life with significant exploration upside in Safari Link and multiple geophysical anomalies indicating probable reserve expansion

The Kabanga opportunity represents a rare combination of world-class asset quality, geopolitical timing, and development readiness in the nickel sector. The project's after-tax NPV of $2.37 billion and IRR of 22.9% based on current metal price assumptions, with low AISC averaging $2.71 per pound for refined nickel products, demonstrates robust economics supporting debt capacity and equity returns even in subdued pricing environments.

BHP's exit strengthens Lifezone's strategic position by providing full control over offtake allocation at a moment when Western governments actively seek to diversify nickel supply chains. The deferred payment structure preserves cash during the critical pre-FID period while the Taurus bridge facility funds execution readiness activities.

Tanzania's transformation in power infrastructure and transportation connectivity removes historical barriers preventing Kabanga's development. The combination of reliable hydroelectric power, advancing railways, and established port facilities means the project no longer requires investor funding for adjacent infrastructure—dramatic de-risking compared to typical African scenarios.

The hydrometallurgical processing pathway, leveraging renewable energy and producing zero atmospheric emissions, positions Kabanga favorably as environmental regulations tighten and supply chain traceability requirements expand. While current conditions don't support green nickel premiums, regulatory trajectory increasingly mandates sustainable sourcing, potentially creating future pricing advantages.

For investors, the thesis centers on acquiring exposure to a development-stage nickel asset of exceptional quality, advancing toward production during strategic supply chain realignment, with economics generating returns across price scenarios. The 2025-2026 timeline to financial close provides near-term catalysts for valuation re-rating as financing agreements materialize and the project transitions to execution phase

TL;DR

Lifezone Metals acquired BHP's 17% Kabanga stake for deferred consideration, gaining 100% control of a tier-one nickel asset with $1.6B NPV, 23.3% IRR, and $3.36/lb costs. Tanzania's new infrastructure (grid connection, standard-gauge railway) has de-risked historical development concerns, while Western financing partners including US DFC view the project as strategically critical given 70-80% Indonesian supply concentration. With feasibility complete, $60M bridge financing secured, and FID targeted late 2026, the company transitions from decades of exploration to execution phase with proprietary hydromet technology offering potential licensing upside beyond the 18-year initial mine life.

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