The Mozambique government has approved a mining agreement with Twigg Exploration & Mining Limitada for the mining of graphite in the Balama district of Cabo Delgado province. Twigg, which is based in the city of Chimoio, in the province of Manica, is the wholly owned Mozambique subsidiary of Australia-domiciled, ASX-listed Syrah Resources (Syrah).
The decision was taken by the Mozambique Council of Ministers (Cabinet) in a regular weekly meeting at the end of last month. The news was announced by council spokesperson and Deputy Culture and Tourism Minister Ana Comoana and then by a media release through the ASX by Syrah.
According to the resolution of the Council of Ministers, the mining agreement will be signed, on the side of government, by Minerals Resources and Energy Minister Letícia Klemens. Comoana further told local media that the agreement gave the company the right to mine, process, stockpile and market the mineral products found in the licence area. The mining agreement is valid for 25 years and requires a minimum investment of $87.99-million.
“The approval of the mining agreement by the government of Mozambique represents a significant milestone for the company and reaffirms Mozambique’s commitment to the long-term sustainability, stability and success of the Balama project,” affirmed Syrah MD and CEO Shaun Verner. The agreement serves to consolidate all the previously obtained approvals and project documents. Further, it clarifies for the company the governing laws and creates a contract covering its mining rights and other obligations, regarding the Balama project.
“In accordance with ordinary administrative procedures, the main legal terms of the mining agreement will now be gazetted and the agreement signed by Twigg and the Minister of Mineral Resources and Energy [on behalf of the government of the Republic of Mozambique] in the coming weeks,” explained Syrah in its ASX release. “It will then be presented to the Administrative Court in Mozambique for sanctioning, after which it will be binding and enforceable. The company will announce key commercial terms of the mining agreement once it is signed and becomes binding and enforceable. The mining agreement is not required for the commencement of production at the Balama project.”
Earlier this year, Syrah stated that it expected to start production at Balama during this (third) quarter, followed by ramp up to full production. As of May, 80% of the Balama process plant had been completed. This included the finishing (apart from some minor works) of the main concrete works for the process plant and its associated infrastructure; the erection of all the conveyor systems with their belts and some electrical instruments ready for installation; and the completion of the engineering and procurement activities and delivery to site, except for the attrition cells. In addition, all the structural steel and plate fabrication had been completed and delivered to the site, and off-site pipe fabrication had also been finished with deliveries to the site nearly finished. On its website, the company outlines the plant commissioning process: construction verification, dry commissioning (with no-load energisation), wet commissioning (the plant operating with water and air), ore commissioning (the first introduction of ore into the process), and then, finally, optimisation (“tuning” the process to reach the desired capacity and product specifications).
The company has described the graphite from Balama as being of “exceptionally high quality”. Balama will start as an openpit operation, using truck and shovel mining. The company states that the strip ratio will be low. Syrah has divided the property into two sections, Balama East and Balama West, which include three so-far-identified high-grade zones. Balama East has the very high-grade Mepiche zone and Balama West the high-grade Ativa and Mualia zones. These three zones together contain an inferred resources of 306-million tons at an average grade of 16.1%. The Ativa zone, which will be the first to be mined, has a inferred resource of 21-million tons with a grade of 20.8%.