Tanzania re-opens its doors to Aussie explorers as Walkabout gets mining licence
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There are finally some greenshoots emerging for ASX explorers in Tanzania with junior graphite player Walkabout Resources now officially receiving its much-needed mining licence for the Lindi Jumbo project.
After a prolonged period of uncertainty that has held up the granting of licences and forced some juniors to exit the troubled east African country, Tanzania is now re-opening its doors to Aussie miners.
There are around 20 ASX-listed companies with projects in Tanzania and a large chunk of them have seen their share price hammered over the government’s decision to make sweeping changes to its Mining Act.
Gold explorer Manas Resources (ASX:MSR) backed out of a project a year after striking the deal because it was no closer to completing the transfer of licences due to restrictions in place in Tanzania.
Meanwhile, Indiana Resources (ASX:IDA) put its Ntaka Hill nickel project on the backburner and picked up some prospective gold ground in Mali instead.
The newly appointed mining commission is now working through a backlog of licence applications, including Strandline Resources’ (ASX:STA) mining licence for its Fungoni heavy mineral sands project.
Strandline said earlier in August its application has been “recommended” but the mining licence is still to be granted.
Bill Witham, head of the Australia-Africa Minerals & Energy Group (AAMEG), told Stockhead it looks as if there is a “thawing in some of the issues” in Tanzania.
“Everyone is getting much more positive and seeing the machinery of government moving again,” he said.
In March, emerging graphite producer Magnis Resources (ASX:MNS) said it successfully negotiated changes to the Special Economic Zone (SEZ) licence granted to subsidiary Magnis Technologies Tanzania (MTT).
Under the agreement, Magnis’ operation will be treated as an offshore entity, which will help to mitigate the concerns regarding investment following last year’s legislative changes.
Walkabout (ASX:WKT), meanwhile, is aiming to start commissioning its flagship Lindi Jumbo graphite project by mid-next year.
The company needed the mining licence to secure the remaining funding and start commissioning early works for the project.
“The mining licence approval is the final major legislative requirement for the project,” Mr Mulligan said.
The next steps for Walkabout are to sign the engineering, procurement and construction contract with Chinese engineering firm Jinpeng Mining and Machinery Co, as well as appoint the Tanzanian contractors and commission early works.
Walkabout has the cash to begin the early works and it will ramp up its efforts to secure the rest of the project funding from mostly Chinese backers, director Allan Mulligan told Stockhead on the sidelines of the Africa Down Under conference in Perth, WA.
The company had about $6.4 million in cash and no debt at the end of June.
Walkabout plans to supply about 25 per cent of its graphite from Lindi Jumbo to the battery market with the rest to supply high-value markets like expandable graphite.
Demand for graphite is primarily driven by the steel market, but the ever increasing growth in the lithium-ion battery industry is driving demand for both natural flake graphite and synthetic graphite.
Graphite’s qualities as a fire suppressant — particularly in building materials — is also driving demand.