PERTH (miningweekly.com) – The share price of graphite developer Graphex Mining rose by nearly 35% on the ASX on Thursday after the company’s Chinese partners reaffirmed their commitment to the Chilalo project, in Tanzania.

Graphex told shareholders that it had revised the terms of a proposed joint venture (JV) and equity investment agreement previously reached with the syndicate of investors, led by CN Docking Joint Investment & Development.

In line with new Tanzanian legislation, each party’s interest in the project will reduce equally to provide for any interest held by the Tanzanian government.

On the basis of a 16% free-carried interest to be held by the Tanzanian government, CN Docking will invest between $15-million and $17-million for a 42% interest in the Chilalo project.

All other terms of the non-binding agreement, regarding offtake and prospective financing for the project, will remain unchanged.

Under the previous agreement, the syndicate would have been required to make an equity investment of between $18-million and $20-million for a 50% JV interest in the Chilalo project, through a project-level incorporated JV.

Debt guarantees will also be provided, if required, by both parties for the targeted project finance of up to 65% of the final pre-production capital costs. Furthermore, offtake agreements for a minimum of 50% of the Chilalo product, at market prices, will also be undertaken, with the syndicate to provide assistance to the JV to procure purchasers for the remaining product.

“The revised agreement is a tremendous vote of confidence in the quality of our Chilalo project and demonstrates how committed our Chinese partners are to concluding the JV, offtake and financing arrangements,” said Graphex MD Phil Hoskins.

“To have reached this position in less than two weeks since the announcement of the proposed legislation changes in Tanzania is testament to the strength of the relationship between Graphex and the CN Docking-led syndicate built over the last two years. This bodes well for our potential JV relationship.”

A prefeasibility study on the Chilalo project estimated that a capital injection of $74-million would be required to support average production of 69 000 t/y of graphite concentrate over a ten-year mine life.