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Aminex and Solo deepen relationship in Tanzania with Kiliwani deal

Solo Oil has deepened its presence in Tanzania through an agreement to buy 13% of Aminex’s stake in the Kiliwani North gas development (KNDL) for US$7mln.

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Solo Oil has deepened its presence in Tanzania through an agreement to buy 13% of Aminex’s stake in the Kiliwani North gas development (KNDL) for US$7mln.

Initially, Solo (LON:SOLO) will acquire a 6.5% interest in KNDL from Aminex's wholly-owned subsidiary Ndovu Resources for US$3.5mln with a 45-day option to buy a further 6.5%.

Aminex (LON:AEX) said it will use the net proceeds to reduce its outstanding debt and strengthen its balance sheet.

Currently, Ndovu owns 65% of KNDL, which contains the Kiliwani North 1 (KN-1) well, but that stake will reduce to 52% once the sale to Solo goes through.

KN-1 is expected to produce at approximately 20mln cubic feet per day (mmcfd) from early 2015 and will be Aminex’s and now Solo's first revenues from Tanzania.

Independently verified resources at Kiliwani North are estimated to be 45bn cubic feet of gas in place, while a pipeline is under construction to the new Songo Songo processing plant.

Advanced negotiations for a gas sales agreement are expected to be satisfactorily concluded in the near future, Aminex added.

In June, Aminex attributed a value of US$13.4mln to its share in KNDL, saying at the time it was mulling a sale of up to 20% of its stake.

Aminex and Solo are also partners in the Ruvuma Production Sharing contract in Tanzania, with respective holdings of 75% and 25%.

Jay Bhattacherjee, Aminex’s chief executive, said the disposal was an important step towards paying down all outstanding corporate debt.

Neil Ritson, Solo’s chief executive, added the acquisition significantly increases Solo's exposure to the rapidly developing Tanzanian gas sector and will provide valuable revenue for many years.

“Solo and Aminex are continuing to work together to commercialise the exciting multi-tcf Ntorya discovery and participation in Kiliwani North provides valuable near-term revenue and insights into the Tanzanian gas market."

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