Triton Minerals has signed a binding memorandum of understanding (MOU) with China’s Shandong Yulong Gold to divest a 70% interest in its graphite assets in Mozambique for A$17m.

The MOU encompasses the sale of stake in the Ancuabe Graphite Project, IP and drill core assets related to the Nicanda Hill and Nicanda West projects, as well as stake in the Cobra Plains mining concessions.

These assets are together termed as ‘Mozambique Graphite Assets’.

Triton said the transaction is the “fastest and most logical route to production for the flagship Ancuabe graphite project”.

Under the MOU, Triton will receive the A$17m payment in stages. An initial sum of A$2.55m is due within 15 days of signing the MOU.

Subsequent payments include A$5.95m upon meeting certain conditions such as obtaining necessary approvals, and a final instalment of A$8.5m set for 28 February 2025.

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The proceeds from this transaction are earmarked for Triton’s investment in a proposed joint venture (JV) in the Mozambique assets, where it will retain a 30% interest.

Triton executive director Andrew Frazer said: “The compelling offer submitted by Shandong Yulong represents a significant opportunity for Triton to realise value via expected cash payments totalling A$17m in the near term. These funds will provide Triton with the opportunity to diversify its portfolio via the assessment of value accretive acquisition opportunities.

“Triton will initially retain a 30% ownership in the Mozambique Graphite Assets, which provides Triton with exposure to upside in the graphite market.

“Ultimately, we think this transaction is the best way to generate value for shareholders in a timely manner, given Shandong Yulong’s size, balance sheet and desire to develop and operate the Mozambique Graphite Assets.”

The companies expect the formal agreements to be executed in mid-September 2024 and to close the deal in February 2025 following shareholder approval and satisfaction of other conditions.

Last year, Triton Minerals secured a 25-year mining concession for the Cobra Plains graphite project in Mozambique.