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Syrah Resources’ Push Into Mineral Sands Results In Substantial Portfolio Expansion

Syrah Resources' (ASX: SYR) push into mineral sands began long before it switched its focus to graphite and as a result the company has amassed an impressive portfolio of eight prospecting licences in which it controls a 100% interest.

The eight exploration licences cover 1350 square kilometres in the northern and central coastal areas of Tanzania and host significant mineral sands anomalies identified by past explorers.

Syrah has a substantial landholding in Tanzania with most of the coast known to be prospective for heavy mineral sands now secured by Syrah through either application or granted licence.

The company's recent acquisition of Jacana Resources included the Tanga licence on the north Tanzanian coastline.

Jacana has previously noted the mineral sand potential of this licence and its proximity to Base Resources' 146 million tonne at 4.89% heavy mineral Kwale deposit in Kenya.

Syrah has applied for vacant ground available along prospective areas of the Tanzanian coast and has acquisition agreements in the pipeline with various private individuals for other key areas of ground highly prospective for heavy minerals.

The impetus exists for further exploration along the coast of Tanzania with several discoveries of heavy minerals anomalies and high grade mineralisation in nearby southeast African countries.

Kenmare Resources is currently producing around 1 million tonnes per annum of ilmenite dominated heavy minerals from its Moma project in Mozambique, while the Richards Bay deposit produces about 1.9 million tonnes per annum of heavy minerals.

Tanzania is the only southeast African country with a coastline that does not have a known, large heavy minerals deposit.

The Tanzanian coastline runs for about 800 kilometres and has the same ocean current patterns and coastal geology as its neighbouring countries.

Fungoni

The Fungoni prospect is located on a promontory about 25 kilometres southeast of Dar es Salaam, the capital of Tanzania.

At Fungoni, there is a 300 metre by 150 metre very high grade core at the northern end of the prospect containing over 15% heavy minerals.

Best intersections include 4 metres at 27.8% heavy minerals, 4 metres at 24.9% and 4 metres at 23.1%.

Importantly, the assemblage of heavy minerals is exceptional with 25% zircon, 5% rutile and 44% ilmenite.

The exceptionally high zircon content of the mineralisation makes it a high priority exploration target.

Tajiri

The Tajiri prospect lies within the southernmost of the three Syrah licences to the south of Tanga on the northern coastline of Tanzania.

The three licences contain several zones that have been interpreted to be greater than 3% heavy minerals from surface sampling, exploration pits and limited hand auger drilling.

Best intersections at Tajiri include 14 metres at 9.2% heavy minerals and 9 metres at 12.3%.

Average assemblage of the heavy minerals is 7% zircon, 12% rutile and 72% ilmenite. The zone is open to the north and south, and is currently over 3 kilometres long, 200 to 600 metres wide, averaging 4 to 6 metres thick at a grade of 4-5% heavy minerals.

Strong Zircon Demand

Mineral sands prices - in particular those for zircon, rutile and ilmenite - are at record levels.

While Iluka Resources (ASX: ILU) recently reported a softening in zircon demand in China, it anticipates more favourable medium to longer term supply/demand of zircon and high grade titanium dioxide feedstocks for the pigment and titanium metal industries.

Booming mineral sands prices are based on supply shortages and higher demand, in part, for tiles, zirconium chemicals and paint in Asia.

Independent consultant TZ Minerals International recently forecast that the highly concentrated global zircon market is expected to face a supply deficit from mid-2012 onwards due to continuing supply shortages and growing demand, especially from China, which would lead to further rises in zircon prices.

In 2000, ilmenite, rutile and zircon prices were around US$120, US$475 and US$300 per tonne respectively. Currently they are about US$300, US$1,300 and US$2,400 per tonne respectively and rising.