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Kibaran Resources Receives Funding Interest For Epanko Graphite Project

Kibaran Resources (ASX:KNL) has now received an Expression of Interest (NYSE:EOI) from a Development Finance Institution (DFI) to co-finance development of the Epanko Graphite Project in Tanzania.

Shares are expected to open firmly higher.

The EOI increases confidence that production at Epanko will commence in 2016.

Epanko currently has a JORC Indicated and Inferred Resource of 22.7 million tonnes at 9.8% TGC, for 2.223 million tonnes of contained graphite.

The DFI's interest is for the provision of a senior loan of up to EUR 20 million (A$28m) with a tenure of at least 6.5 years, including a one-year grace period on principal repayment.

The DFI is a member of a large banking group rated as one of the 'Worlds 50 Safest Banks' and is one of the largest European development finance institutions with a strong track record in the mining sector both in Africa and globally.

The DFI has also indicated that it is interested in acting as arranger on a best effort basis for the balance of the project debt, underpinning the financing of the Epanko Project's development.

While other details of the EOI are confidential they are based on standard commercial debt financing terms and a debt to equity ratio of 65:35 has been indicated.

Andrew Spinks, executive director for Kibaran, commented:

"This is a very exciting phase that Kibaran is now entering. The debt financing EOI from DFI is a major step forward for the Company, which has now firmly entered the development stage of the Epanko Graphite Project.

"The EOI provides further confidence to graphite market participants that Epanko will commence production in the near-term, and advance Kibaran's ongoing discussions with a number of potential offtake customers."

Tanzania has a stable government committed to mining sector growth and development, significant mining support services, extensive infrastructure network (road, rail and ports) and has the third largest gold industry in Africa.

Additional EOI details

The EOI is contingent on a positive result of an evaluation of the commercial, legal, ecological, social and other aspects of the Project, including the feasibility study currently being undertaken by GR Engineering and receipt of the Environmental Certificate, which is currently being processed by the Tanzanian Government following the completion of the Environmental and Social Impact Assessment.

Although the EOI is non binding, it clearly demonstrates the confidence DFI has in the Epanko Project, which is already supported by a binding offtake agreement and an LOI is currently being progressed to a binding status.

The offtake agreement and LOI underpin 50% of the planned 40,000 tonnes per annum graphite production at Epanko.

Analysis

The EOI increases confidence that production at Epanko will commence in 2016.

Although the EOI is non binding, it clearly demonstrates the support the DFI has in the project, which already has a binding offtake agreement.

Also - the fact that the DFI is a member of a large banking group rated as one of the 'Worlds 50 Safest Banks' shows the calibre of the project.

Kibaran remains the only company globally with a binding off-take agreement outside China.

The DFI has also indicated that it is interested in acting as arranger on a best effort basis for the balance of the project debt, underpinning the financing of the project's development.

Epanko currently has a JORC Indicated and Inferred Resource of 22.7 million tonnes at 9.8% TGC, for 2.223 million tonnes of contained graphite.

With this estimate only covering 20% of the project area, the resource could be just the tip of the iceberg.

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