PERTH (miningweekly.com) – Junior Graphex Mining has agreed to the terms of a joint venture (JV) and offtake agreement over its Chilalo graphite project, in Tanzania, with a Chinese syndicate led by CN Docking Joint Investment and Development Co.
The syndicate would be required to make an equity investment of between $18-million and $20-million for a 50% JV interest in the Chilalo project, through a project-level incorporated JV.
Debt guarantees will also be provided, if required, by both parties for the targeted project finance of up to 65% of the final pre-production capital costs.
Furthermore, offtake agreements for a minimum of 50% of the Chilalo product, at market prices, will also be undertaken, with the syndicate to provide assistance to the JV to procure purchasers for the remaining product.
“We are extremely pleased to have signed a term sheet with CN Docking, which lays out key commercial terms for a JV, offtake and prospective financing arrangements for Chilalo,” said Graphex MD Phil Hoskins.
“This is an important milestone for Graphex, and paves the way for the early development of Chilalo with minimal dilution to our shareholders.”
Hoskins said that Graphex shareholders would benefit from CN Docking’s extensive knowledge of the Chinese graphite market and its strategic interest in graphite, as well as downstream applications such as flame retardant building materials.
“This relationship is expected to provide strategic opportunities that will enable long-term shareholder value creation well beyond the initial first stage development of Chilalo, which is a world-class deposit.”
A prefeasibility study on the Chilalo project estimated that a capital injection of $74-million would be required to support average production of 69 000 t/y of graphite concentrate over a ten-year mine life.
The two companies will now move forward to prepare detailed documentation, and was hoping to formally execute the agreement within the next three months.