December 15, 2017

Tanzania: Magnis Resources review advice on revised mining legislation

Tanzania’s President John Pombe Magufuli. REUTERS

Magnis Resources has received and reviewed legal advice and government directives on the revised legislation and its impact on its activities in Tanzania. The legal advice regards Magnis Technologies Tanzania (MTT) and Uranex Tanzania (UTZ).

Magnis Resources is the only company that, through its subsidiaries, holds a Special Mining Licence (SML) and Special Economic Zone status (SEZ) in Tanzania allowing for an integrated working relationship.

The situation, with the recently introduced legislation, in Tanzania continues to evolve, impacting all companies working within the mining and exploration sector, including those that hold Mining Licences (ML) and SMLs.

Magnis Resources awaits appointments for the newly prescribed “Mining Commission”, to confirm all mining licence agreements, and awaits the appointment of a new Minister for the Ministry of Energy and Minerals to allow meaningful and authoritative communication to occur.

Current arrangement

Uranex Tanzania  (UTZ) is the exploration and mining entity that will produce a graphite concentrate of 90% to 95% purity at the Nachu graphiteproject.

Magnis Technologies Tanzania (MTT) is the entity that will further process and beneficiate graphite concentrate in the Special Economic Zone (SEZ), into higher grade graphite products using proprietary technology, that Magnis Resources has developed for this graphite.

The graphite concentrate produced by UTZ will be sold at market rates to MTT.  At current market pricing, the transfer price would be between US$600 – $650 per ton.

Tanzanian mining legislation and mining framework

The legislative amendments to the legal framework governing the mining and natural resources sector in Tanzania, notably the three Bills that were passed by the Tanzanian parliament on 3 and 4 July 2017, have since been officially signed so that the Bills have become Acts and operate as law by the President on 7 July.

Industry commentators believe the New Legislation appears to predominantly target the mining and export of precious metals and metal concentrates from existing operations in Tanzania that have been the focus of recent reviews conducted by Presidential Committees.

The New Legislation proposes to allow the Tanzanian Government (“Government”) to renegotiate all existing Mine Development Agreements (“MDAs”). In addition, the New Legislation proposes mandatory beneficiation within the country and no licence or permit shall be issued for exportation of raw minerals and mineral concentrates.

A level of uncertainty remains within the Tanzanian mining framework.

Magnis Resources and its advisers will continue to assess the impact of these changes and update shareholders accordingly.

All recent developments have had no net detrimental impact on the Project financial viability as set out in the 2016 bankable feasibility study and the company’s board and management continue to support the project’s development.

The board and management of Magnis Resources have always acted in the best interests of all stakeholders in the project and have been respectful in the company’s dealings with the Government of Tanzania.

Magnis Resources respects the government’s ambition to amend the mining legislative laws to provide the country with a structured framework for the industry going forward.

Magnis Resources plans to remain in a suspension until 28 August 2017 where it will announce details of a Memorandum of Understanding relating to its involvement in a Lithium-ion Gigafactory in Europe.


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