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Mining licence submitted for Fungoni

13th October 2017

     

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ASX-listed Strandline Resources has submitted the mining licence application for its Fungoni heavy mineral sands (HMS) project, in Tanzania, to the Ministry of Energy and Minerals.

The application has been prepared in light of the advanced engineering work conducted to date as part of the almost-completed Fungoni definitive feasibility study and the recently promulgated amendments to Tanzanian legislation.

Adjudication of the mining licence application will be undertaken by the Ministry of Energy and Minerals and the newly appointed commision under the President’s office. With project definition now essentially complete, Strandline will step up its engagement with the government of Tanzania and related stakeholders to progress the development of its HMS projects in a manner which delivers significant benefits to both the people of Tanzania and Strandline shareholders.

The mining licence application marks another key milestone on the path to developing Fungoni, says Strandline MD Luke Graham.

“This project will deliver a host of economic and social benefits for Tanzania. It will also pave the way for the development of Strandline’s other mineral sands projects in Tanzania.”

Legislative Changes

In July 2017, the Tanzanian government signed into law three Bills designed to reform the way the extractive industries are regulated in the country, essentially rebalancing control of the natural mineral products between industry and the State and increasing transparency and collection of associated mineral revenues.

The new laws are the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017, and the Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Act, 2017. Also enacted was an omnibus Bill, the Written Laws (Miscellaneous Amendments) Act, 2017, which amends Mining Act, 2010.

Based on the information available, it is understood that many of the amendments have no significant impact on the viability and operational plan of the Fungoni project. Some of the amendments, such as the introduction of a new 1% export levy provision, results in minor cost increases or operational considerations and these will be modelled where known. Importantly, the project is based on advanced beneficiation and separation of the mineral in Tanzania, using state-of-the-art equipment, to increase product value and marketability prior to export. The company believes that this fundamental project characteristic aligns well with the intent of the revised legislation.

The amendment with the largest potential impact is a proposed 16% free-carried interest in the project for the Tanzanian government.
In the absence of any clarity on how this will be implemented or if it will be applied to the Fungoni project, the company has assumed
to date, that it is a post-tax dividend to government payable once all capital costs have been recovered, and debt and interest charges paid.

Benefits to People

The company’s strategy is to develop and operate a series of low-cost, high margin expandable mining assets in a responsible and sustainable manner. Development of the Fungoni project will forge a new industry for Tanzania, being the first major commercial mineral sands mine in the country, and pave the way for future developments there by Strandline.

Fungoni will provide important benefits to the people of Tanzania, says Strandline.

“The key social benefits will be job creation, training and job diversity and community engagement programmes. The Fungoni project would create in the order of 100 locally sourced direct skilled jobs through the operational phases. “The company expects a
significantly larger number of indirect employment opportunities (typically three to five times) will also be supported by the project.”

The involvement of local businesses and contractors in the project will be supported through a procurement and logistics policy consistent with government’s objectives, while the company expects its community engagement and sustainability initiatives will foster collaboration and partnerships. “Further, the project will provide capital flows into Tanzania and would provide an additional element in the country’s growing level of foreign investment.”

Tajiri Deposit Update

Strandline reports that visual panned total heavy minerals (THM) estimates of drill samples from prospect areas at the Tajiri deposit of the company’s Tanga mineral sands project, in Tanzania, have revealed high-grade results, showing a good continuity of grade and mineralisation along strike.

The results, reported this year, were derived from 4 750 m of air-core resource drilling across the priority T1 to T4 targets and highlight the strong potential to increase Tajiri’s already significant existing indicated resource of 59-million tons at 3.7% THM.

“The company is focusing on cost-effective, high-value-add exploration activities and is on track to delineate a series of commercial-grade resources at Tanga that will provide the inventory necessary to underpin a large-scale HMS operation,” says Graham.

Increasing the existing mineral resources across the highly prospective Tajiri tenement, he says, is part of Strandline Resources’ strategy at Tanga to establish an inventory with critical mass, which will underpin a mining hub close to the Port of Tanga.

Strandline Resources is now progressing laboratory THM analysis, geological interpretation and mineral assemblage/chemistry testwork and expects formal results to be announced later this year.

Tajiri’s existing resources comprise a high unit value assemblage of 87% valuable minerals, which includes 68% ilmenite, 10% rutile, 5% zircon and 4% leucoxene. Graham points out that previous drilling results dating back to February at the T1 zone showed 4% THM at 13.5 m and 3.6% THM at 9 m.

The T2 zone showed 6.8% THM at 9 m and 4.3% THM also at 9 m. Further, the T3 zone has 6% THM at 6 m and 6.8% THM at 7.5 m, while the T4 zone showed 4.5% THM at 6 m and 3.3% THM at 7.5 m. He adds that high-grade visual panned estimates of the recently completed infill drilling at Tajiri prospects have continued to encounter similar grades and intervals.

“The recent results from Tajiri infill drilling confirm the strong potential to grow the high-grade mineral resources in the tenement area, with sample analysis now under way,” Graham states.

He highlights that Strandline Resources has also started a maiden drilling programme totalling 1 000 m across multiple higher-grade HMS prospects in the north of Tanga, including the Kitambula and Mkinga targets. These prospects are at an early stage, having been generated from the detailed geophysical survey, follow-up soil surveys and mineral assemblage characterisation conducted earlier this year.

Graham adds that Strandline Resources is a Tanzanian-focused mineral sands developer positioned within the major zircon and titanium producing corridor in south-east Africa. The company has a dominant mineral sands position with a series of 100%-owned projects spread along 350 km of the Tanzanian coastline.

“Strandline’s strategy is to develop and operate high-quality, low-cost, expandable mining assets with market differentiation. Leveraging off the exploration success in recent years, the company’s focus is to continue its aggressive exploration and development strategy to progress economically attractive projects based on high unit value titanium and zircon products,” he concludes.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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