Kibaran Resources has signed a non-binding memorandum of understanding (MoU) with Richland Resources to consolidate its Merelani-Arusha graphite project in Tanzania, with other assets in the region.
Under the terms of the MoU, both companies have agreed to undertake due diligence and work towards a legally-binding agreement to consolidate their respective graphite assets in the Merelani region in a joint venture (JV).
The assets include TanzaniteOne Mining's graphite processing plant, which was closed in the late 1990s following a change to the production of Tanzanite.
The JV would provide Kibaran with a second source of graphite in Tanzania, as well as a clear strategy to expand its future graphite production.
Kibaran has a 90 day exclusive period to complete due diligence studies, under the MoU.
Kibaran Resources executive director Andrew Spinks said: "Following the recent milestone achievement of a signed binding off-take agreement for Epanko graphite, we are pleased to be in negotiations to progress the company's Merelani-Arusha Graphite project with the Richland group, the owners of the historical Merelani Graphite Mine."
The Merelani-Arusha Graphite project is located 12km east of TanzaniteOne Mining and covers an area of 973.4km, with seven tenements.
Richland acquired the Merelani Tanzanite and graphite mine in 2004 from African Gem Resources.
The Merelani graphite mine started operations in 1995 and produced 6,776t of graphite.
Mineralisation was initially identified to be sufficient for 40 years of operation, at a mining rate of 15,000t per annum of high-grade flake graphite of 97-98% purity.
Kibaran said the mine encountered financial problems in 1997 and the last shipment of remaining stockpiled ore was made in February 1998.
Image: The Merelani processing plant. Photo: courtesy of Richland Resource Ltd.