Syrah Resources' (ASX: SYR) shares are expected to trade higher after being granted a 25 year Mining Licence for the Balama Graphite and Vanadium Project from the Mozambique Government.
Under Mozambique law, a further extension to the Mining Licence of 25 years is available, with the licence including both graphite and vanadium.
Syrah continues to move forward quickly at the project, and conversion of exploration facilities to accommodate construction has begun, while a significant portion of the mobile fleet for construction and mining has been purchased and is awaiting delivery.
Construction of the Balama Project will commence after the wet season ends in April 2014.
Syrah said that there are very few jurisdictions around the world that can boast a Mining Licence being granted so efficiently from time of application, which follows an earlier example where the company was allotted water rights from Chipembe Dam promptly after applying for those rights.
These facts illustrate that Mozambique is most definitely “open for business”.
Earlier in the month Syrah received a major vote of confidence in the project from investors, after raising $35 million through an institutional equity placement.
Syrah recently upgraded 90% of the Indicated Resource, or 11.6 million tonnes at 19.9% total graphitic carbon and 0.4% V2O5, at the Ativa Zone of Balama West to the Measured category.
Notably, the Measured Resource of 11.6Mt grading 19.9%TGC and 0.4% V2O5 and the remaining Indicated Resource is currently sufficient for 11 to 12 years of production.
Overall Resources at Ativa stands at 51.32 million tonnes at 19.9% TGC and 0.38% V2O5.
Syrah also said it was confident that it would be reporting an upgraded Resource including Measured and Indicated for the Mualia Zone in Balama West and the Mepiche Zone in Balama East soon.
Balama progresses towards development
Syrah said that it strongly believed that Balama would become a mine well before the first hole was drilled.
The deposit is extraordinary by every measure, and is by far the largest graphite deposit in the world as well as being a very sizeable vanadium deposit.
It has large zones with extremely high grades of graphite and excellent grades of vanadium. The deposit is outcropping over a distance of several kilometres with almost no strip ratio for many years.
The deposit has zones of extremely coarse flake graphite.
Last week ordered the majority of the mobile fleet required to undertake civil works and construction of plant site, tailings dam and roads. This fleet will be incorporated into mining following construction
Analysis
Syrah has been in discussions with potential debt financiers and off-take partners for several months with an outcome expected in the first quarter of 2014.
The company said it anticipates debt financing the remaining amount required to develop the project, and is confident that the project can be developed for under US$100 million.
Syrah is also in a position to begin construction of Balama as soon as the wet season ends in about April 2014.
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