In what could be a positive sign for other junior players exploring in Tanzania, the local government has agreed to allow Magnis Resources to advance its Nachu graphite project.

Magnis shares (ASX:MNS) spiked more than 20 per cent on Friday morning to 51c.

Tanzania stunned ASX-listed resource plays in July last year with sweeping changes to its Mining Act, including compulsory 16 per cent government ownership of mining companies.

The government then moved to revoke any retention licences issued to exploration companies under previous legislation.

That forced junior players like Indiana Resources, which was exploring for nickel in the troubled East African nation, to consider the sale of their Tanzanian assets and switch their focus to other countries.

Indiana announced earlier in March it is now heading to Mali to look for gold.

Magnis, however, has got the government on side with a licence that lets the company retain full ownership of its Nachu graphite project.

Magnis Resources shares over the past year (ASX:MNS)
Magnis Resources shares over the past year (ASX:MNS)

The company successfully negotiated changes to the Special Economic Zone (SEZ) licence granted to subsidiary Magnis Technologies Tanzania (MTT).

Under the agreement, Magnis’s operation will be treated as an offshore entity, which will help to mitigate the concerns regarding investment following last year’s legislative changes

The SEZ licence for production of value added graphite products is the only such licence to be granted in Tanzania, Magnis told investors.

The deal with Tanzania also allows for international arbitration if a dispute arises.

Chairman Frank Poullas said the agreement “establishes MTT as an approved graphite processor in Tanzania”.

MTT will initially produce refined jumbo and super jumbo flake products and spheroidal graphite products for the lithium-ion battery market.

A lithium-ion battery requires roughly twice the amount of graphite than lithium carbonate.

Jumbo flake products attract a higher price than smaller flake products.

Magnis has been contacted for further comment.