Magnis Resources signs mineral development agreement with Tanzanian government

Posted on : Friday , 30th October 2015

Tanzania - ASX-listed junior Magnis Resources has reached a 10 year agreement with the Tanzanian government on the terms of the mineral development agreement (MDA) for the Nachu Graphite project in Tanzania.

An MDA is a mechanism within the Tanzania Mining Act of 2010 for the holders of a special mining licence (SML) to ensure the rights of both parties are fully defined and protected.

While there are a number of commercial matters covered by the MDA, the key terms agreed are summarised as follows:

The government of Tanzania will hold a 5% free carried shareholding in the project
There is an option for the government to purchase an additional 10% of the project at “fair market value” as determined by an internationally recognised valuer.
The agreement provides fiscal stability which ensures all taxation, royalties and duties are fixed for the term of the MDA.
A tax rate of 30% and a 3% production royalty.
Provisions that prevent any form of nationalisation of the project.
These terms are considered beneficial to the company and will provide a great deal of certainty to those parties interested in financing the development of the project. Furthermore, in relation to other jurisdictions, the terms are considered to be very competitive and it greatly assists the Project to be economically attractive to investors and all other stakeholders.

The MDA has been finalised following considerable discussions with the government’s negotiating team and approval from the Mining Advisory Board. The Ministry of Energy and Minerals has now issued a letter to the company confirming the agreement.

Magnis Resources chairman Frank Poullas thanks the Government officials from all levels representing the many Ministries that have been involved in the process and welcomes the company’s partnership with the Government in the project.

“We look forward to our end goal of bringing Nachu into production in a sustainable manner for the benefit of all stakeholders, especially the local community,” says Poullas.

He believes that the Nachu project has the potential to be of similar economic significance to Tanzania as the gold industry, which has also benefited from the political stability and degree of comfort from previous MDA agreements.