Graphex Mining Limited has signed a non-binding term sheet which sets out a number of the key commercial terms relating to the proposed joint venture, offtake and prospective financing for the Chilalo Graphite Project.
Term sheet involves equity investment of $18-20million directly into wholly owned Graphex subsidiary, Ngwena Tanzania
Parties are targeting project debt for up to 65percent of pre-production capital. Term sheet contemplates execution of an offtake agreement for a minimum of 50pct of Chilalo product
A break fee of $1.8 million will be payable if either party executes an alternative transaction within three months of term sheet.
The Term Sheet has been signed by CN Docking Joint Investment & Development Co. Ltd (‘CN Docking’), a subsidiary of China National Building Materials Group. CN Docking intends to lead a syndicate of Chinese investors through a new special purpose investment entity.
“We are extremely pleased to have signed a term sheet with CN Docking, which lays out key commercial terms for a joint venture, offtake and prospective financing arrangements for Chilalo. This is an important milestone for Graphex, and paves the way for the early development of Chilalo with minimal dilution to our shareholders,” Graphex Managing Director, Phil Hoskins, commented.
“This commitment from such a high calibre partner is supportive of the quality of the Chilalo Graphite Project and is testament to the market opportunity we have been relentlessly focused on for some time – supplying coarse flake graphite direct to the Chinese expandable graphite market.”
Commenting on the importance of securing a strategic partner such as CN Docking, Mr Hoskins added, “The significance of securing CN Docking as our partner, with its strategic relationships in China, should not be underestimated. Our shareholders will benefit from their extensive knowledge of the Chinese graphite market and their strategic interest in graphite as well as downstream applications such as flame retardant building materials – a key driver of future demand for flake graphite. This relationship is expected to provide strategic opportunities that will enable long-term shareholder value creation well beyond the initial first stage development of Chilalo which is a world class deposit.”
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