Syrah Resources Limited (ASX: SYR) secures mining right from the Government of Mozambique to mine graphite and vanadium at Balama Graphite Project in Mozambique until 2038. This news pulled the Syrah shares up by 1.345% which were touching the ground a day back.
Today morning, 27 September 2018, graphite producer Syrah Resources revealed that the executed Balama Operations’ mining agreement has finally been approved by the Administrative Court in Mozambique. The agreement has been affected through Syrah’s wholly owned subsidiary Twigg Exploration and Mining Limitada, operator of Balama graphite project. However, as of now the certificate is still on hold which is reported to be issued on the subsequent payment of the legal fees by the company.
With this approval Syrah Resources seizes long term mining rights, due to expire on 6 December 2018, in respect of graphite and vanadium mining at Balama Operations under the provisions of the applicable laws as enforceable in 2013. Besides corporate tax, the miner is liable to pay 3% of production tax on sales value every quarter.
In exchange of the approval, Mozambique’s government acquired 5% of free equity interest, non-diluting, in subsidiary Twigg. Further, the government approval has come at a heavy cost as the terms provided that the company’s extraordinary benefits derived from Balama operations have to be shared with the government.
As per the terms of Mining Concession, the company has to spend US$15 million on the initiatives taken for the community development. Further, Syrah Resources has given a US$22.5 million parent guarantee against any loss or damage incurred in the event of breach of mining concession.
Balama is a graphite project located in Mozambique which has recorded first production of high quality natural flake graphite in November 2017. Balama operations include sale and shipment of graphite across the globe including the supply to battery anode producers.
Syrah's Managing Director & CEO, Shaun Verner stated Balama operations have been in accord to the agreed terms since its start; and by securing the mining agreement with Government of Mozambique, the company’s stakeholders could be more confident as it underpins Syrah Resources to be the world’s premier producer of high quality graphite.
On completing the final regulatory step at Balama Operations, Syrah’s share price edged up by 1.345% to $2.260 on September 2018 (4:22 PM AEST). The stock has seen a performance change of -35.73% over the past one year.
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