ASX-listed Bass Metals could potentially acquire up to a 35% stake in Aim-listed graphite producer StratMin Global Resources’ Loharano mine, in Madagascar, through a farm-in agreement.

The Australian company would acquire a 25% stake in StratMin’s wholly owned subsidiary Graphmada Mauritius, which held the Loharano mine, for an initial investment of £2-million.

Subject to the successful completion of the initial investment by November 30, Bass would have the right to acquire, at its sole discretion, a further 10% interest in Graphmada Mauritius prior to December 31, at a price to be determined by reference to the share price of StratMin at the time of the election to exercise the option.

The collaboration with Bass would provide StratMin with a cost-effective mechanism to access the sophisticated graphite investor base in Australia.

The ASX currently had a number of listed graphite project developers and producers with a combined market cap in excess of A$1-billion, as well as active graphite stock trading, major institutional investor participation and equity research coverage on the sector from a number of international banks and broking houses.

By partnering with Bass, StratMin would gain exposure to this market and an efficient source of development capital.

StratMin would use the £2-million to further fund optimisation work at Loharano; complete the detailed feasibility study for the expansion of the Mahefadok project, which was adjacent to Loharano; and to initially capitalise the joint venture with Tirupati Carbons & Chemicals Group at the Vatomaina project, also in Madagascar.

Together these projects were expected to reposition StratMin as a midtier international graphite concentrate producer.

“This transaction reduces the funding risk going forward for StratMin by giving it access to a large and active graphite investor pool and gives the company the confidence to look at more significant transactions going forward.

“We have an opportunity now to capitalise on the early mover status StratMin has gained and, while most of our peers are focused on completing feasibility studies and cost cutting, together with Bass, we can work on expanding production from Loharano and developing new opportunities,” StratMin CEO Brett Boynton commented.