Mineral sands miner Strandline Resources has been buoyed by recent conversations with the Tanzanian government regarding the development of its Fungoni project.

The company (ASX:STA) is waiting to receive its mining licence.

Investors were equally as hopeful, driving shares up 26 per cent to 14.5c by 12pm AEST Wednesday.

Several regulatory moves by the Tanzanian government in the past couple of years has created uncertainty for ASX-listed miners active in the east African country.

In July last year, the government introduced amendments to the Tanzanian Mining Act 2010 including potential renegotiation of agreements, a required 16 per cent government ownership of mining projects and the right to acquire up to 50 per cent of mining companies under certain conditions.

Following legal reviews of Tanzania’s new mining regulations, and after consultation with the Ministry of Minerals earlier this year, Strandline updated and resubmitted its mining licence application in March this year to ensure compliance with the new provisions.

STA shares over the past year.
STA shares over the past year.

Strandline believes it is now much closer to being able to start development of the Fungoni project after it received “strong endorsement” from the Tanzanian Ministry of Minerals.

The mining licence won’t be granted until the new Mining Commission is formed, which Strandline says is “very close to being finalised”.

Chief Luke Graham told Stockhead that new Mining Minister Angellah Kairuki was very positive about the Mining Commission being formed in days rather than months.

“We’re expecting that we will be one of the early applications being processed through the new regime,” he said.

The news comes about a month and a half after Magnis Resources (ASX:MNS) revealed it had secured an agreement with Tanzania that allowed it to retain full ownership of its Nachu graphite project and receive tax breaks.

Bill Witham, head of the Australia-Africa Minerals & Energy Group, told Stockhead at the time that “President [John Magufuli] seems to be in listening mode at the moment”.

AAMEG has been working with affected miners and briefing the Australian Department of Foreign Affairs and Trade on the matter.

Strandline’s $US30 million ($38.6 million) Fungoni project, which is located about 25km from Dar es Salaam port, is expected to produce 2 million tonnes each year of heavy mineral sands including ilmenite, rutile and zircon.

Ilmenite is the main source of titanium dioxide, which is used in paints, fabrics, plastics, paper, sunscreen, food and cosmetics.

Zircon, meanwhile, has a high melting point, making it ideal for use in engines, electronics, spacecraft and the ceramics industry.

Rutile is also used in the manufacture of ceramics, as a pigment, and for the production of titanium metal.

A definitive feasibility study released in October last year estimated the six-year mine would deliver total revenue of $US168 million, with payback in less than three years.

Once Strandline has the mining licence in hand, it expects to spend around two to three months locking down debt and equity funding for the project.