Tanzanian Royalty strikes deal with Kazakh Africa Mining

Tanzanian Royalty Exploration Corp.‘s (TNX-T, TRE-x) shares climbed 5% to $4.39 per share following news it had signed an agreement with Kazakh Africa Mining involving its diamond licences in the Mwadui area of Tanzania’s Lake Victoria Greenstone Belt .

Under the deal, Kazakh Africa can acquire a 100% interest in Tanzanian Royalty’s diamond licenses in the Mwadui project area by fulfilling various option payments. Tanzanian Royalty will then receive a gross overriding royalty (GORR) of 1.5% on all diamonds sold.

The agreement is a good fit with Tanzanian Royalty’s strategy of building business relationships with “entrepreneurial-minded, independent-thinking, technically competent industry partners who share our vision of the mineral potential in Tanzania,” the company’s chief executive, James Sinclair, said in a statement.

Two directors on Kazakh Africa’s board hold “prominent positions” with the Almatyenergoservice, an energy company in Kazakhstan, the largest of the former Soviet republics.

“While the business climate has certainly slowed, we see no concerns expressed by partners about the long-term prospects for mineral commodities,” Sinclair noted. “The willingness to consummate deals is there, it’s just a question of immediate corporate responsibilities and, of course, timing.”

Tanzanian Royalty is particularly interested in working with emerging economies, he added, “whose leaders think longer term and where “industrialization programs have been put into place that are unencumbered by high risk, short term, politically expedient policies that are so pervasive in the West.”

Kazakh Africa plans to evaluate the Mwadui licenses, which are known to host alluvial gravels.

The Mwadui area encompasses the Williamson diamond mine, which hosts the huge Mwadui kimberlite, about 160 km south of the town of Mwanza on the shores of Lake Victoria. The kimberlite pipe was discovered in 1940 by Dr. J.T. Williamson, a Canadian geologist, and has produced over 17 million carats of high-quality diamonds.

Tanzanian Royalty’s Mwadui project area encompasses 886.26 sq. km. The project area is within the northern part of the Shinyanga-Mwadui greenstone belt, where explorers have been looking for diamonds for many decades.

Tanzanian Royalty has 88.86 million shares outstanding and a one-year trading range of $1.99-$6.37.