Walkabout Resources – (ASX: WKT, Share Price: $0.165, Market Cap: $45m, coverage initiated @ $0.12 in April 2016 – current gain of 38%).
Key Catalyst
Confirmation from the Ministry of Minerals of Tanzania of the granting of the much-anticipated Mining Licence for the Lindi Jumbo Graphite Project in southeastern Tanzania.
WKT has been a strong performer since coverage initiation during April 2016 – having generated a 38% share price gain. Nevertheless, it hasn’t been an easy ride. Whilst WKT has remain focused on plans to progress its Lindi jumbo graphite project in Tanzania, the company has had to deal with significant political uncertainty following the introduction of a Government moratorium on the award of Mining Licences and Special Mining Licences within the country. As a result, WKT and its Tanzanian resource peers all suffered in share price terms. With the recent establishment of a new Tanzanian mining commission, the ability to issue mining licences was reinstated, culminating in WKT’s recent election to exercise its option to acquire a 100% stake in its Lindi graphite project, along with the granting of the much-anticipated Mining Licence by the Tanzanian authorities, allowing WKT to further progress project funding options.
Latest Activity
Grant of Mining Licence
WKT has received confirmation from the Ministry of Minerals of Tanzania with respect to the granting of the much-anticipated Mining Licence for its Lindi Jumbo Graphite Project in southeastern Tanzania.
WKT will now be authorised to finalise the on-site Relocation Assistance Program (RAP), which is in advanced valuation draft from the Chief Government Valuer.
Technical Significance
The granting of the Mining Licence is a major milestone in terms of project development, representing the final major legislative requirement for the Project. It is particularly pleasing given the recent delays and challenges that had confronted resource companies operating in Tanzania. It provides the market with greater certainty and confidence with regards to the project.
It will also allow WKT to agree final construction plans with respect to the Lindi Jumbo mine site, as well as allowing for finalisation of the Engineering, Procurement and Construction (EPC) Agreement with construction partner, Yantai Jinpeng Mining and Machinery Co. Orders can also now be lodged for the manufacture and supply of final plant equipment.
Furthermore, the grant of the Mining License allows WKT to further progress advanced project funding options, which have been pending the awarding of the mining license.
Acquisition of remaining 30% of Lindi Project
WKT also recently exercised its option to acquire the remaining 30% of the prospecting licence that hosts its Lindi Jumbo Graphite deposit. WKT now owns 100% of tenement PL9992/2014.
Technical Significance
The purchase of the remaining 30% project interest represents a significant value-adding transaction for WKT. Furthermore, this significant project milestone is indicative of the confidence that WKT management has in the project and in recent events in Tanzania.
Lindi Project Overview
WKT owns the prospecting rights over 325 sq km of four contiguous exploration licenses within the highly prospective Mozambique belt, a region that hosts some of the world’s highest grade, coarse flake graphite deposits. The Lindi Jumbo Graphite Project is situated in south-eastern Tanzania, approximately 200km from the export port of Mtwara. The company took the project from discovery in October 2015 to the completion of a highly robust Definitive Feasibility Study (DFS) within 16 months.
Figure 1: Lindi Jumbo Project Location
Summary
WKT’s strong share price performance reflects renewed interest in the stock as a result of continued progress at Lindi and renewed confidence in Tanzanian authorities. This confidence is reflected in WKT’s decision to exercise its option to boost its project ownership to 100% and the granting of the Mining Licence. The multiple and discrete domains of the Lindi JORC Resource has the proven flexibility and robustness to support a potential mining operation. Optionality is added by the potential for mining of substantially higher-grade zones during periods of economic downturn. WKT’s development strategy envisages a focused, modest, low-risk approach to exploration and potential mine development.
