Seed funding of $US20 million ($NZ28.5 M) has been secured by Australian company Plaman Global, which is proposing to mine more than 30 million tonnes of a rare organic “black diatomite” near Middlemarch in Central Otago.
Plaman Resources Ltd, which trades as Plaman Global, purchased the mine in 2015 for more than $A5 M ($NZ5.4 M).
It has a potential mine life of 27 years and estimated resource of 31 million tonnes, which would be processed to supplementary stock feed and exported. Unconfirmed funding estimates range from tens of millions of dollars' investment to several hundred million, depending on the scale eventually achieved.
In an article by Animal Pharma, Plaman's president of animal nutrition and health Rob Aukerman said the company had received $US20 M from multinational investment bank and financial services company Goldman Sachs.
This would be used to build Plaman's workforce and undertake more animal feed trials.
Goldman Sachs will remain financial adviser to the project as it seeks further funding, he said.
The initial concept is for the 42 hectare mine at Foulden Hills to employ up to 40 staff, with the raw diatomite trucked to a site near Bluff for processing, by up to 90 staff, then exported.
Industry sources confirmed Plaman was still considering alternate options for transport, processing and export.
It is expected the project could take three to four years to get production fully under way. The Foulden Hills project is considered the largest black diatomite quarry known.
Aukerman said diatomaceous earth was used in a range of industries, including human health, and was approved for use in animal feed in many countries.
“It's a unique product that is very much rich in organic matter,” Aukerman said.
As an animal food supplement, diatomite improves gastro-intestinal health and may reduce the need for antibiotics. To date, Plaman had completed successful feed supplement trials on poultry and pigs, with cattle next on the trial agenda, and later, aquaculture and the pet sector.
Aukerman said all the big animal health companies were trying to develop the “clean food movement,” given antibiotics and pharmaceuticals had come in for a lot of scrutiny in recent years.
“It's the right time for our product. It's natural, it's non-antibiotic and it has broad applications,” he told Animal Pharma.
He noted there was not a complicated regulatory pathway ahead for diatomite as a supplement, given its existing approval in many countries.
Plaman's ultimate majority shareholder is listed as tech giant Iris Corporation of Malaysia.
Earlier this month, Plaman undertook to continue its relationship with the University of Otago's geology department, allowing access during the year. The department considers the Foulden Hills site as one of the country's pre-eminent fossil sites, and hopes a part of the site will be preserved in perpetuity.
*Animal Pharma is part of the business intelligence division of London-headquartered Informa PLC, which is listed on the London Stock Exchange and is a member of the FTSE 100. Informa is a business intelligence, academic publishing, and knowledge and events business, with a staff of 7,500 world-wide.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.