Australian critical mineral producer Strandline Resources has reached an agreement to sell its majority stake in Tanzanian mineral sands projects to a subsidiary of Shenghe Resources for A$43m ($28.8m).

The divesture includes both the shares and the assignment of inter-company loans related to the projects.

Strandline currently owns 84% of the Tanzanian mineral sands projects, with the remaining 16% owned by the Government of Tanzania.

The proceeds from this transaction will be utilised to repay Strandline’s existing super senior indebtedness and to bolster its working capital.

Under the agreed terms, Strandline will receive A$27.2m for the sale of its shares and an additional A$15.8m for the transfer of its inter-company loans to the Tanzanian projects.

This financial injection is expected to enhance the company’s liquidity position, as noted by Strandline, which is in active discussions with its financiers.

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Shenghe Resources has expertise in developing, mining and processing rare earths and mineral sands.

It has also established a global footprint with investments in various international projects including those in the US, Europe and Australia.

The completion of the sale is contingent upon fulfilling several conditions precedent, including securing all necessary regulatory and government approvals from both Tanzanian and Chinese authorities.

Strandline managing director Jozsef Patarica said: “This sale agreement is a very positive outcome for all parties and I would like to thank everyone involved for their hard work in getting the transaction to this point.

“Strandline believes this will be a real win for Shenghe and Tanzania given Shenghe’s intention to fast-track the development of the Tanzanian Projects. It will also provide important liquidity to Strandline as it continues to ramp up its flagship Coburn project in Western Australia.

“We would also like to thank the Government of Tanzania, which continues to provide extensive support for Strandline and Shenghe as all parties work toward completion of the sale and the accelerated development of the Tanzanian Projects.”