Australian critical mineral producer Strandline Resources Limited (ASX: STA) has agreed to sell its Tanzanian mineral sands projects to a subsidiary of Shenghe Resources Holding Co. (Shenghe) of China.
Shenghe, listed on the Shanghai Stock Exchange, is a leading developer, miner, and processor of rare earths and mineral sands, with investments in multiple global projects, including those in the US, Europe, and Australia. The Government of China directly owns 14.06 % of Shenghe.
The Company’s main product portfolio consists of rare earth oxide, rare earth salts, rare earth metals, metal catalysts, and molecular sieves.
Strandline’s mineral sands projects in Tanzania include Fungoni, Tajiri, Sudi, and Bagamoyo. The Fungoni and Tajiri projects have obtained mining licenses, while the Sudi and Bagamoyo projects are still in the exploration stage.
These projects are joint ventures with the Government of Tanzania. Strandline holds an 84% stake, while the Government of Tanzania owns the remaining 16%.
The purchaser, Ganzhou Chenguang Rare Earths New Material Co., is a subsidiary of Shenghe. The company intends to acquire 100% equity in Strandline Resources UK Limited, a wholly-owned subsidiary of Strandline Resources Limited, thereby indirectly holding interests in the four heavy mineral sand projects in Tanzania.
Strandline will receive a total consideration of A$43 million, split between A$27.2 million for the sale of its shares in the Tanzanian Projects and A$15.8 million for the assignment of the inter-company loans Strandline has provided to fund its Tanzanian Projects.
The completion of the sale of the Tanzanian Projects is subject to numerous conditions precedent, including obtaining all necessary Tanzanian and Chinese regulatory and government approvals, and there being no material adverse change, including (but not limited to) a material breach of a warranty provided by Strandline or the licenses for its Tanzanian projects being revoked.
Strandline Managing Director Jozsef Patarica commented: “This sale agreement is very positive, and […] Strandline believes this will be a real win for Shenghe and Tanzania, given Shenghe’s development of the Tanzanian Projects. It will also provide important liquidity to Strandline to ramp up its flagship Coburn project in Western Australia. We would also like to thank the Government of Tanzania, which continues to provide extensive support for Strandline and Shenghe as all parties work toward completion of the sale and the accelerated development of the Tanzanian Projects.”
