Graphite developer Black Rock Mining Limited (ASX:BKT) announced it has signed the Framework Agreement (Agreement) with the Government of Tanzania (GoT) to jointly develop the world-class Mahenge Graphite Mine.
The Agreement includes the provision for a Free Carried Interest (FCI) which is required by law under Section 10 of the Mining Act whereby a 16% non-dilutable shareholding in the capital of all mining companies is held by the GoT.
Under the Agreement, the following structure has been agreed:
• A Joint Venture (JV) Company, Faru Graphite Corporation (Faru), has been established to develop the Mahenge Graphite Mine. Faru is the Swahili word for Rhinoceros. The Tanzanian Government will own a 16% undiluted free-carried interest shareholding in Faru, with 84% owned by Black Rock via its wholly owned UK subsidiary company, Mahenge Resources Limited;
• A Special Mining Licence (SML) will be granted to unify existing Mining Licences ML 611/2019 and ML 612/2019 and a part of Prospecting Licence PL 13752/2019;
• Existing approved Environmental Permits and Resettlement Action Plans granted to ML’s 611 and 612 will be grandfathered to the SML; and
• An exemption will be issued to Black Rock from the provisions of the Mines Act 2017 requiring SML developers to issue 5% of stock to local interests and listing of 30% of stock on the Dar es Salaam Stock Exchange.
Black Rock MD and CEO, John de Vries commented: “Reaching agreement with the Tanzanian Government including Free Carried Interest is a watershed moment for Black Rock. This enables the Company to rapidly move forward to deliver a new clean source of high-grade Graphite to a growing global market. Under the Framework Agreement, the Government of Tanzania will secure project economics through a combination of dividends, taxes and duties. Our commitment to Tanzania exceeds this through the purchase of goods and services, provision of power, rail haulage, and port services. It is estimated that the cumulative benefit to the Tanzanian economy will be USD 6.5 billion over the life of the project. I am pleased that the Company and the Government of Tanzania are now partners and we look forward to delivering on our shared promises, by building the Mahenge Graphite Mine that will bring significant benefits to Tanzania, and for global decarbonization markets driving clean energy storage technologies.”
As of 2019, Tanzania’s estimated graphite reserves stand at 18 million tonnes ranking 5th in the world after Turkey, China, Brazil, and Mozambique.
Tanzania’s graphite reserves are being explored and developed by Australia-based graphite developers, namely Magnis Resources (ASX:MNS), Volt Resources (ASX:VRC), EcoGraf (ASX:EGR), Walkabout Resources (ASX:WKT), and Black Rock Mining (ASX:BKT). Production stages have not been reached yet.