Highlights:
- Bunyu Stage 1 development funding advances
- $1.3 million short-term loan facility completed and drawn to provide additional funding flexibility whilst Stage 1 development funding is completed
- Delegation from Japan and China who visited the Bunyu Project to investigate potential graphite supply
- Important recent changes to Tanzanian Minerals Regulations, including:
- Graphite concentrate with TGC grade above 65% permitted for export
- Positive local content regulation amendments
Tanzanian-focused flake graphite development company Volt Resources Limited (ASX: VRC) (“Volt” or, the “Company”) is pleased to report on the Company’s activities for the quarter ended 31 March 2019.
March Quarter Activities Overview
Bunyu Development Funding
The Company and its advisor, Exotix Capital, continue to progress the planned Tanzanian Note offer and listing of the Notes on the Dar es Salaam Stock Exchange (DSE).
In December 2018, the Company received approval from the Dar es Salaam Stock Exchange PLC to list its Notes on the DSE. On 25 January 2019, Volt Graphite Tanzania Plc (VGT) received correspondence from the Tanzanian Capital Markets and Securities Authority (CMSA), which included an unrealistic commercial condition for the Note Offer to proceed.
Exchange of correspondence and discussions with the CMSA to remove the condition continued during the March quarter and were extended to other government departments and officials to promote the benefits of Tanzanian investors participating in the funding of the development of the largest graphite resource in Tanzania.
In parallel, Volt and Exotix Capital has advanced alternative funding options including, but not limited to, a Note Issue and Listing on the Stock Exchange of Mauritius (“SEM”) using principally the same Tanzanian Note Prospectus, and progressed discussions with US and Asian institutional funds for participation in the Stage 1 development funding.
The Company and Exotix remain positive that Bunyu Stage 1 development funding will be successfully completed.
Project Engineering and Construction
The Company commenced a process to select an engineering firm for the role of Project Management Contractor (PMC) in late Q4 2018.
A recognised engineering services firm has been selected and the Company has commenced contract negotiations with the selected firm.
Once the contract terms and conditions have been finalised and contracts executed by the parties, an announcement will be made in relation to this important appointment.
Bunyu Site Visit
During March, the Company hosted a delegation from Japan and China who visited the Bunyu Project to ascertain the potential for graphite product supply.
The delegation inspected the planned mine and ore processing sites, reviewed local infrastructure and services, travelled the logistics route between the project site to the Port of Mtwara and reviewed the Mtwara port facilities.
Tanzanian Mineral Regulations Update
During the quarter, the Government of Tanzania released “The Mining (Mineral Value Addition) Guidelines, 2019” which outlines important requirements to in-country value addition in relation to mineral processing.
Volt has noted several recent positive changes including the permitting of graphite concentrate with a grade above 65% total graphitic carbon (“TGC”) to be exported after laboratory tests and payment of the applicable royalty.
This is a pleasing development for Volt, with two binding offtake agreements confirmed and a further offtake agreement to be signed following completion of development funding and commencement of construction.
The Company also welcomes amendments to the local content regulations in Tanzania which now require that a minimum of 20% of a company’s shares must be held by Tanzanian citizens to qualify as an indigenous Tanzanian company. This has been significantly reduced from the previous 51% minimum requirement.
Change of Registered Office
The Company has changed its registered office and principal place of business to Suite 10 Level 25, 108 St Georges Terrace Perth WA 6000. Volt’s postal address has also changed to the above address. The Company’s telephone number remains unchanged as +61 (0)8 9486 7788.
Short Term Funding
In January, the Company secured a short-term (6-month) funding facility of $1.33 million with a face value of $1.5 million, providing added funded flexibility over the coming months while the Company completes the discussion and documentation for the Stage 1 development funding.
The funding facility will not be dilutionary to existing shareholders as no equity will be issued during the six-month loan period. The Company has commenced discussions on additional working capital funding to accommodate the extended duration for the completion of development funding and enable the Company to meet its nearterm expenditure commitments both in Australia and Tanzania.
Funding options under discussion include the re-financing and extension of the existing bridge finance facility, an equity raising and/or a mezzanine facility and are expected to be finalised in the near future.
Management Commentary
Volt Resources CEO Trevor Matthews said:
“This quarter we have maintained our focus on successfully completing the funding process, which will enable the commencement of the Stage 1 development program at Bunyu.”
“Although our development funding process has taken longer than anticipated, we are optimistic that a solution will be reached in the near-term. While we acknowledge the delay in proceedings is frustrating, the immediate impact is offset by the near-term flexibility provided by the interim bridging funding facility secured in January.”
“We are excited by what beckons over the next six to twelve months and look forward to providing further updates in due course.”
For and on behalf of Volt Resources Limited
Trevor Matthews
Chief Executive Officer
FOR PERSONAL USE ONLY
For further information please contact:
Trevor Matthews – Chief Executive Officer Tel: +61 8 9486 7788