Tanzanian Royalty Exploration (TNX.TO), a Toronto-listed metals explorer, on Tuesday signed a joint venture agreement with the Tanzanian government to develop a $280 million gold mine in the east African country.
The deal involves the Buckreef Gold Mine Re-Development Project in Africa's fourth-largest gold producer, where Tanzanian Royalty, through its Tanzanian unit, TANZAM 2000, owns a 55 percent stake in the mine.
The state-run State Mining Corporation of Tanzania (STAMICO) owns the remainder of the project located some 115 kilometres southwest of the gold-rich Mwanza region near Lake Victoria.
The agreement signed today is in line with expectations of the new Mineral Policy. It is the beginning of fulfillment of aspirations envisaged by the government, Tanzania's Energy and Minerals Minister William Ngeleja said at the signing of the deal in the commercial capital, Dar es Salaam.
The minister instructed the country's Commissioner for Minerals to speed up processing of a request from Tanzanian Royalty's subsidiary for increasing the size of the mining area.
This project is a role model which must receive our utmost cooperation and attention, he said.
Ngeleja said Tanzanian Royalty had offered STAMICO a 15 percent stake in a separate gold exploration project at Kigosi in the northwestern Tanzanian region of Shinyanga.
Tanzania passed a new mining act last year that allowed the government to own a stake in strategic mining projects.
The Buckreef project represents the government's biggest involvement in mining activities since the new legislation.
The mine project currently covers an area of around four square kilometres, so the developers of the project are keen to enlarge that area to around 20 square kilometres to build a full-fledged mine, acting minerals commissioner, Ally Samaje, told Reuters.
The re-development of the Buckreef gold mine will cost around $280 million ... STAMICO owned this mine for many years but was not able to properly invest in the costly mining operations.
The Buckreef Gold Mine project has inferred resources of 826,000 ounces of gold, Tanzanian Royalty said.
Further exploration work is still ongoing at the area and we believe there is a possibility that the total gold reserves will increase once that work is concluded, said Samaje.
A total of 15 licences are included in the project area, which could substantially boost the future reserves of the mine.