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Kibaran Resources Extends MOU With Richland For Tanzanian Graphite Project

Kibaran Resources (ASX: KNL) has signed a three month extension to the existing Memorandum of Understanding to consolidate its Merelani-Arusha Graphite Project with the Richland Group's graphite assets in Tanzania.

Kibaran has now largely completed its due diligence and is working with Richland to finalise the terms of the agreement.

Both groups are keen to finalise the agreement to allow the recommencement of graphite production at Merelani.

At the Mahenge graphite project the drilling program commenced in March remains on schedule despite progress being hampered by heavy rainfall.

The Environmental and Social Impact Assessment work, required for the Mining Licence application is ahead of schedule.

The Environmental Consultant has completed the scoping study, which will be submitted to the Tanzanian National Environmental Management Council within the next week for approval.

The study could be approved by the end of May, allowing the next stage of field work to commence.

A league of its own

Kibaran remains globally one of few listed companies with a sales partnership and binding offtake agreement for the sale of graphite.

In late December 2013, it signed a binding offtake agreement with a sophisticated European graphite trader.

The off-take agreement to purchase 10,000 tonnes of flake graphite concentrate per year, over a 5 plus 5 year period, provides an independent endorsement of the quality and commercial appeal of graphite at the Epanko deposit.

Graphite is regarded as a critical material for future global industrial growth, destined for high technology applications including nuclear reactors and lithium-ion battery manufacturing.

Epanko Deposit

Kibaran's 100%-owned Epanko deposit is located within the Mahenge Graphite Project.

The scoping study for Epanko was based on an annualised process rate of 200,000 tonnes of graphitic feedstock at a grade of 10.5% Total Graphitic Carbon.

This should produce around 20,000 tonnes of graphite concentrate each year, consisting of 21.6% large flake, 52.2% medium flake, and 26.2% fines.

Ongoing feasibility studies are now aimed at refining and upgrading this estimate.

Analysis

Kibaran's drilling program is a key step towards upgrading the existing Inferred Resource of 14.9 million tonnes at 10.5% TGC to the Indicated and Measured categories, allowing it to report on its 2013 Scoping Study findings.

In addition to Kibaran's graphite interests, the Kagera Nickel Project remains underexplored and is located along strike ofXstrata's Kabanga nickel deposit, also in Tanzania, considered to be the largest undeveloped, high grade nickel sulphide deposit in the world.

With an advanced graphite project and a nickel exploration asset along strike from Xstrata's Kabanga, Kibaran's current valuation of $15 million looks primed for appreciation given news flow and catalysts ahead.

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