TIDMSTGR
RNS Number : 7532L
Stratmin Global Resources PLC
05 October 2016
5 October 2016
StratMin Global Resources Plc
("StratMin" or the "Company")
Joint Venture Funding Initiation and Vatomaina Project
Update
StratMin Global Resources Plc (AIM: STGR) is pleased to announce
that is has initiated its funding of the joint venture (with
Tirupati Carbons and Chemicals Pvt Ltd ("Tirupati")) Vatomaina
project, and provides the following project update.
Initiation of Funding:
StratMin has made an initial investment in Tirupati Resources
Mauritius Ltd, the joint venture holding company of the joint
venture between StratMin and Tirupati ("TRM"). US$50,000 has been
invested by way of a subscription for 1.48% of the enlarged issued
share capital of TRM (the "Investment"). A further investment is
expected to be made at month end from the funding facility
announced on the 28 of September 2016.
Funds will be applied to completion of the Environmental Permit,
which is the final regulatory requirement before on site
development can be initiated. This is detailed further in the
Project Update below.
Overview:
Vatomaina is a large flake graphite project in Madagascar,
currently in development as a joint venture between StratMin and
Tirupati that will eventually result in StratMin being issued 31%
of the enlarged share capital of TRM (equivalent to 45% of TRM's
issued share capital prior to the Investment). The key features of
this project are as follows:
-- 12,000 tonnes per annum large flake graphite mine and processing plant
-- Projected US$5 million CAPEX budget
-- Believed by the Directors to be the lowest CAPEX / tonne graphite project under development
-- Planned plant commissioning in October 2017
-- US$1.5m investment commitment from StratMin through the subscription for new shares in TRM
-- StratMin commitment funded by the secured non-recourse facility announced 28 September 2016
Transaction structure:
The joint venture is via a staged equity investment in a joint
venture holding company, Tirupati Resources Mauritius ("TRM"),
currently a wholly owned subsidiary of Tirupati. TRM in turn is the
98% owner of Tirupati Madagascar ventures SARL ("TMV"), the owner
of the Vatomaina licence, Exploitation Permit (PE) No. 38321.
In addition to the development of Vatomaina, TRM has established
a graphite trading operation servicing a number of smaller graphite
concentrate producers in Madagascar. In addition to giving TMV an
enhanced in country presence, this trading activity has
successfully seeded markets in the US, Europe and Asia for
production from Vatomaina.
The rights to the joint venture were acquired from Consolidated
Chrome Pte Ltd on 16 June 2015.
Vatomaina Project:
Exploitation Permit (PE) No. 38321 was issued to TMV on 16
January 2016 by the Bureau du Cadastre Minier de Madagascar (BCMM)
and is valid for 40 years. Exploitation Permit (PE) No. 38321 was
converted from an earlier licence granted on 10 December 2010
originally acquired by TMV in November 2013. It covers an area of
25 sq. km. with multiple zones of graphite bearing ore previously
identified and historic workings from French colonial era graphite
mining.
The Vatomaina project is approximately 20km from the Company's
historic Madagascar operations at Loharano. Vatomaina is near the
regional town of Brickaville and 70km from Madagascar's primary
export port, Tamatave. The project licence area straddles the
highway connecting Tamtave with the Capital city, Antananarivo.
This sealed road provides excellent year-round transport
infrastructure for the project, connecting Vatomaina to the port
and international graphite markets.
The Vatomaina project is the site of historic graphite mining
during the French colonial era and the project area has been well
explored. An independent report commissioned by TMV identified an
Exploration Target (as defined by Clause 17 of the Joint Ore
Reserves Committee ("JORC") Code 2012 edition) in the range of 6.5m
to 13.1m tonnes with a grade ranging from 2% to 11% fixed carbon,
with upside potential below 30m..
The Vatomaina ore body is very similar in nature to the Loharano
deposit with a flake size distribution of 30:35:35 jumbo, large and
small flake, giving it very attractive pricing potential. The
graphite is hosted in a highly weathered clay zone, occasionally
outcropping at surface and suitable for free dig, open pit,
mining.
Project Progress:
Since the execution of the joint venture, TMV has made
significant technical and administrative progress with the project
and has now initiated development.
The original licence acquired has been successfully upgraded to
a full 40-year exploitation licence. Following this an Environment
Permit application was submitted, with the draft permit presented
to TMV on 16 September 2016 for final review prior to issue, which
is expected during 2016. This is the final regulatory requirement
prior to on site development initiation.
Sample material has been shipped from Madagascar to Tirupati's
Indian operations and bulk samples have been successfully tested
with 96% FC material produced. This sample material has been
provided to a range of Tirupati's customers and successfully tested
in commercial production of various graphite products.
From the sampling, liberation studies and bulk testing, process
flow sheets for the plant have been finalised. Engineering and
design have been prepared by Tirupati with full plant costings
determined for both CAPEX and OPEX. The mine and plant layout has
been planned with supporting infrastructure requirements
identified, costed and included in the project plan. These plans
are currently being independently reviewed, with a report expected
from the consulting engineers before the end of the year.
Based on sample parameters and processing performance, the
product mix and yield of flake graphite concentrate has been
estimated. From this, revenue forecasts have been made with
reference to existing sales data from Tirupati's global
distribution operations.
TMV has staffed a permanent in-country team with a country
manager, geologist and corporate relations officer. This team is
responsible for Government and Regulatory interaction, managing all
project administrative development and reporting.
Current activity:
At an administrative level the focus is on completion of the
Environmental Permit, whose finalisation and issuance will enable
on site development works to begin.
On site a detailed topographic survey is underway including
hydrogeological studies. This will provide critical input for the
following:
-- Mine planning;
-- Determination of site suitability for small scale hydro-power generation;
-- Planning of community development activities including
training facilities, agricultural support, local community health
and local education facilities.
Off site at Tirupati operations in India, workshops are
preparing for in house plant fabrication, equipment customisation
and staff training for deployment to site for the plant
construction phase.
Next Steps:
Over the next quarter the joint venture partners will initiate
the following:
-- On-site road access development, civil and infrastructure
development to enable the mine and plant construction program;
-- Resource drilling to upgrade resource and provide inputs for
mine scheduling, with the intention of producing a JORC compliant
resource estimate in 2017.
Brett Boynton, CEO, Commented:
"The joint venture partners are utilising all of the experience
gained with Graphmada over the last year and a half to rapidly
bring the Vatomaina project into production and generating cash
flow. Leveraging Tirupati's in-house expertise, and we are aiming
to cost-effectively develop the lowest CAPEX per ton graphite
operation in the world. With the favourable flake size distribution
and a low mining cost environment, Vatomaina is targeting to be a
lowest quartile cost per ton producer with a sustainable EBITDA
margin."
For further information please visit www.stratminglobal.com or
contact:
StratMin Global Resources Plc +44 (0) 20
Brett Boynton, CEO 3691 6160
Allenby Capital (Nominated Adviser
& Broker)
John Depasquale/ Nick Harriss/Liz +44 (0) 020
Kirchner 3328 5656
Optiva Securities (Broker) +44 (0) 20
Christian Dennis 3137 1903
VSA Capital Limited (Financial
Adviser) +44 (0) 20
Andrew Raca 3005 5000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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