Volt Resources has hit a roadblock in its efforts to secure $US40m ($56m) in much-needed funding for the development of its Bunyu graphite project in Tanzania.

The junior explorer (ASX:VRC) said Tanzania’s Capital Markets and Securities Authority (CMSA) had set “unrealistic commercial terms” for it to go ahead with its bond issue.

Investors didn’t like the news at all, pushing shares down 25 per cent to an intra-day low of 1.8c – almost on par with the 52-week low it reached in early October.

By 11.45am AEDT, over 8 million shares worth $157,758 had changed hands in 77 trades.

Volt had been planning to undertake an issue of bonds to investors in East Africa that would be listed on the Dar es Salaam Stock Exchange.

The company received approval from the exchange in December last year, but ongoing talks with CMSA had been unsuccessful in reaching terms commercially favourable to Volt.

Volt Resources (ASX:VRC) has struggled to gain momentum in its share price with its debt funding woes.
Volt Resources (ASX:VRC) has struggled to gain momentum in its share price with its debt funding woes.

If one exchange fails, just try another

Volt told investors it would continue talks with CMSA to see if it could still reach a “commercial balance”, but it would also assess its other options.

This includes a bond issue and listing on the Stock Exchange of Mauritius using basically the same Tanzanian prospectus, and US-based institutional funds participation in the stage-one development funding.

Volt had expected to have the funding squared away in the last quarter of 2018.

The company’s goal is to bring its flagship Bunyu project into production at an initial rate of 400,000 tonnes to produce 20,000 to 24,000 tonnes of graphite products each year.

In early August it inked its second deal to supply graphite from Bunyu. It will supply major Chinese processor and distributor Qingdao Tiangshengda 9,000 tonnes a year of its graphite for five years.

Stockhead is seeking comment.