PERTH (miningweekly.com) – ASX-listed Bass Metals has negotiated a substantial reduction in the acquisition price for the Graphmada graphite mine, in Madagascar.

Bass took ownership of the Graphmada mine earlier this year, following a A$15.25-million deal to acquire StratMin Global Resources’ majority share in the project.

Under the original agreement, Bass was required to pay A$1.5-million in cash and issue 75-million shares to StratMin as part of its Tranche 1 obligations, while Tranche 2 consisted of A$3-million worth of shares in Bass on the start of production, or by the end of 2017.

Tranche 3 consisted of the issue of a further A$5-million worth of shares in Bass on the achievement of a production milestone, or at the end of 2018, while Bass was also required to pay StratMin a 2.5% production royalty of up to A$5-million in cash over the next five years.

The company told shareholders on Thursday that it had entered into an agreement with StratMin to pay out at a material discount to its future purchase obligations, and had secured the right to buy back its future royalty payments at a value significantly lower than the expected future royalty obligations.

Under the new agreement, Bass’s obligation to issue A$8-million worth of shares would be waived upon the payment of A$2.64-million in cash over three tranches, the last of which would be payable at the end of September 2017.

Bass will also buy back its royalty obligation for A$500 000, with the option to be exercised by the end of December next year, and no royalty payments payable before this date.

The agreement reduced the future obligations to StratMin from A$13-million to a maximum of A$3.14-million, and took the overall final price for the Graphmada mine from A$15.25-million to just A$5.39-million.

Bass chairperson Rick Anthon said on Thursday that the transaction provided Bass with certainty over its future financial forecasts and allowed the company to move forward with its optimisation and expansion plans.

Bass is hoping to have the Graphmada project produce at nameplate capacity of 6 000 t/y by the second quarter of 2017.