Mozambique will extend BHP Billiton Ltd.'s (BHP.AX: Quote) (BLT.L: Quote) prospecting licence for the $800 million Chibuto Sands project in the southern Gaza province by two years, state-controlled daily Noticias said on Tuesday.

Mineral Resources Minister Esperanca Bias was quoted by Noticias as saying studies carried out at the concession showed the mineral sands were of excellent quality.

From the research done, there is excellent quality and quantity of existing heavy sands, what we have to is to wait for the best opportunity for the effective roll-out of the project, she said.

BHP envisages a world-scale integrated open-cut mining, concentration and smelting operation at Chibuto to produce titania slag and iron, as well as the minerals rutile and zircon.

BHP Billiton inherited the Chibuto Sands project when it took over the Western Mining Corporation (WMC) in 2006.

The Chibuto mines, some 190 km north of the capital and 40 km inland from the sea, are said to have one of the world's largest known heavy-mineral sand ilmenite resource, used to produce titania slag, high-purity pig iron, rutile and zircon. (Reporting by Charles Mangwiro; editing by James Jukwey)

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