EMPOWERMENT mining company Merafe Resources, which is part of a ferrochrome joint venture with Xstrata, would take a 20,5% stake in an associated project for R181m, it said yesterday.

Merafe has a 20,5% stake in the joint venture and its recent expansion project, Project Lion, which together operate 20 furnaces with a production capacity of 1,96-million ton s.

When Merafe entered into the joint venture with Xstrata it was granted an option to participate in Project Bokamoso, a mega chrome-ore pelletising and sintering plant. Bokamoso is intended to address problems created by lower proportions of lumpy ore in ferrochrome furnaces as a result of falling yields from the mines.

Lumpy or agglomerated chrome ore is needed to operate furnaces efficiently. Its production will supplement the agglomeration facilities at the Wonderkop and Rustenburg furnaces.

Construction work on Project Bokamoso started two years ago, and it is due to be commissioned this month .

Merafe finance director Stuart Elliot said yesterday the project came in on time and within budget, no small achievement with resources industry construction projects under pressure on lack of skilled staff and rising input costs.

Merafe did not exercise its option to participate in Bokamoso until now as it was raising finance for its 50% participation in the Wonderkop furnaces and 20,5% in Project Lion, Elliot said. It would have been difficult to raise further funding then for Bokamoso. But participation now, with the group's share price having improved and Bokamoso completed, was highly beneficial for Merafe, he said.

Merafe would pay for its stake in Bokamoso using equity, debt and internal cash flows. It had raised R66m by placing 40-million shares at 165c each with North Sound Capital of Greenwich, Connecticut. Only a small amount of debt would be needed, Elliot said.

Although Merafe management had previously stated its plans of diversifying its interests out of ferrochrome, the exercise of the Bokamoso option had increased its exposure to the industry. But Elliot said management continued to look for other opportunities, and was particularly interested in diversifying into the coal sec