Syrah Resources (ASX: SYR) plans to focus on its graphite interests, including the world class potential Balama Graphite Project, with the divestment of the company’s mineral sands portfolio in Tanzania.
A term sheet with Copper Strike (ASX: CSE) has been signed for the sale of eight mineral sands focused prospecting licences in Tanzania. These licences are in the northern and central coastal areas of the country and cover 1,350 square kilometres over 100 kilometres strike extent.
Due to its size, this mineral sands landholding would have required high cost and time commitments for exploration.
The divestment of these licences will enable Syrah to continue to devote the majority of its resources to the Balama Graphite Project in Mozambique.
Drilling at Balama will begin in a matter of days and will continue until the start of the wet season in November.
In addition, field work is set to begin on the Nachingwea Graphite Project in Tanzania this year. Syrah believes Nachingwea has potential to be a very sizable high grade deposit.
Copper Strike, as a dedicated mineral sands explorer, will have the knowledge and resources to fast track exploration on the mineral sands portfolio.
Transaction consideration
Consideration for the sale is 115.7 million Copper Strike shares, which would be distributed to Syrah’s existing shareholders on record (excluding Copper Strike). Shares would be issued on a 1:1 basis.
This arrangement would allow shareholders in Syrah to retain their interest in the mineral sands portfolio through a dedicated mineral sands explorer. Importantly, this means that shareholders will have the ability to benefit from any exploration success on the portfolio.
The transaction is subject to a number of conditions, including due diligence by Copper Strike and shareholder approval.
Approvals will be sought at Extraordinary General Meetings of both companies, which are expected in July.
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