Australian graphite producer Volt Resources has signed a binding term sheet with Unbounded Opportunities Fund (UOF) to advance the development of its Bunyu graphite mine project in Tanzania.
The Bunyu project is strategically positioned with access to key infrastructure including sealed roads running through the site and a deep-water route via the Port of Mtwara, approximately 140km away.
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Bunyu is reputed to be the largest JORC-compliant mineral resource in Tanzania and one of the largest graphite deposits globally.
The agreement sets out a framework for a major equity investment by UOF and collaboration on project development, aiming to boost annual production rates, improve capital cost efficiency and achieve low unit operating costs.
Under the agreement, UOF has agreed to make a conditional $11.1m (CI$9.22m) equity investment in Volt’s subsidiary, Volt Graphite Tanzania (VGT).
Upon financial close, UOF will acquire a 62% stake in VGT, with Volt retaining the remaining 38%.
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By GlobalDataUOF will also update a feasibility study for the stage one Bunyu graphite project, outlining a capital expenditure of $37m.
The plan targets annual production of 40,000 tonnes (t) of graphite concentrate at 94% total graphitic carbon (TGC), with operating costs estimated at $450/t.
UOF has agreed to cover any capital cost overruns on the project without altering its equity position in VGT, said the company.
However, if unit operating costs rise by more than 10% above the $450/t target, UOF’s equity position will be reduced.
Volt will also arrange project debt financing, aiming for 70% debt to 30% equity.
Under the plan, UOF will take charge of finalising mining, engineering, procurement and construction, and operation and maintenance contracts, establishing project and operations teams, and managing construction and operations.
Meanwhile, Volt will secure offtake agreements, permits including land access, and will oversee local coordination and community commitments.
Volt and UOF have four months, or a mutually extended period, to meet the stated conditions and finalise definitive documentation for the transaction.
If these conditions are not met within the time frame, the term sheet will terminate.
Volt executive chairman Asimwe Kabunga said: “This is a significant milestone for Volt to find a substantial partner to provide equity funding combined with project cost and management support to facilitate the development of the Bunyu graphite project.
“To overcome the funding issues arising from relatively low graphite prices, UOF is confident it can deliver increased annual concentrate production rates with efficient capital cost expenditure and lower unit operating costs when compared with the 2023 feasibility study.
“We look forward to working with UOF in the coming months to complete the significant programme of work to move the Bunyu graphite project to financial close.”
In April 2024, Volt submitted four non-dilutive funding proposals that could inject more than A$150m ($99.3m) into the company.
