Australian exploration and development company Graphex Mining has signed a non-binding term sheet for a proposed joint venture (JV) and offtake and financing for its Tanzania-based Chilalo graphite project.
The term sheet has been signed by China National Building Materials Group’s subsidiary CN Docking Joint Investment & Development.
Graphex Mining managing director Phil Hoskins said: “We are extremely pleased to have signed a term sheet with CN Docking, which lays out key commercial terms for a JV, offtake and prospective financing arrangements for Chilalo.
“This is an important milestone for Graphex, and paves the way for the early development of Chilalo with minimal dilution to our shareholders.
The syndicate would be required to make an equity investment of $18m-$20m directly into a wholly owned Graphex subsidiary, Ngwena Tanzania, in exchange for a 50% JV interest in the Chilalo project, through a project-level incorporated JV.
Under the agreement, the parties will arrange debt for the targeted project finance of up to 65% of final pre-production capital costs.
Furthermore, there are provisions for execution of an offtake agreement for a minimum of 50% of Chilalo product. The Chinese JV partner will arrange for buyers for any remaining product following the offtake.
Once legal documentation and payment of the equity investment amount are completed, work related to reaching a decision to mine will be started, which will include finalising project optimisation, detailed engineering and design, EPC arrangements, as well as securing project finance.
The Chinese syndicate will invest an initial tranche of HK$100m ($13m) that is designated for investment into the proposed JV within ten days.
