Sovereign Metals Limited, an Australian Stock Exchange (ASX)-listed mining company, plans to buy McCourt Mining Company, owners of a graphite project in Malawi, in cash and shares, according to Mining Weekly.
The news on Tuesday this week spiked, by 60 percent, the share price for Sovereign Metals on the ASX, the influential online mining publication has said.
The project in Malawi’s Central Region consists of 8 070 square kilometres (km2) of prime graphite terrain, with the main prospects lying within 50 kilometres of operating railway that connects to the deep-water port of Nacala.
Sovereign, in a statement quoted by the publication, said three prime prospects had already been identified, and at least a further 50 separate targets with known graphite would be progressively explored.
“Under the terms of the agreement, Sovereign would pay Australian Dollar (A$) 1 million in cash, along with 12.5-million fully paid ordinary shares on the completion of the transaction,†according to the online publication.
It said a further 8.75 million unlisted convertible performance shares would be issued on the completion, which could convert into fully paid ordinary shares upon the delineation of an inferred resource of at least 25 million tonnes, at an average grade of no less than 10 percent graphitic carbon.
A further 8.75 million unlisted convertible performance shares would also be issued upon completion, which could be converted to fully paid ordinary shares upon the completion of a positive scoping study within four years, said Mining Weekly.
The statement says Sovereign would further pay a two percent net mine gate royalty from products mined and sold from the project licence area.
The agreement, however, says the publication is subject to shareholder approval, as well as the completion of a technical, financial and legal due diligence on McCourt and the Malawi project.
Sovereign would now look to raise up to A$ 1.1 million (K308 million) through the issue of five-million shares, at 22 cents (K60) a share, to provide additional working capital for the company’s projects.
The share raising is expected to be completed by next week.
Sovereign shares were trading at around 40 cents (K110) a share on Tuesday on ASX.
Sovereign Metals Limited is a recently ASX listed copper, gold and uranium exploration company with four key exploration projects covering 2 037 km2 located in the Cloncurry-Mt Isa area in North West Queensland, Australia.
Mining companies seem to be on the rush for graphite in Malawi.
In July this year, Globe Metals and Mining, another ASX-listed company, also announced that it has entered into an agreement to acquire 100 percent stake of Chiziro Project, an advanced graphite project in Malawi, from Fergie Minerals and Mining Limited at $80 000 (K22 million).
Global graphite consumption is currently at 925 000 tonnes per annum and the price is dependent on graphite flake and purity.
The price ranges between $80 (K21 920) and $3 000 (K822 000) per tonne for coarse flake graphite.
