Magnis Resources, the ASX-listed graphite developer, has entered into a power development agreement with US-based power engineering and construction group Symbion Power.

Tanzania –The agreement between Magnis Resources and Symbion Power is for the provision of a power solution for the Nachu graphite project in Tanzania.

Symbion will provide a total power solution for Nachu by developing and operating a dedicated 30 MW gas fired power station, associated substations and a 132 KV transmission line to connect Nachu to the main power grid.

From Left to Right: Peter Gathercole - Symbion Power VP business development EA, Paul Hinks - Symbion Power CEO, Peter Tsegas - Magnis Resources Director, Rod Chittenden - Magnis Resources COO, Han Van der Vlugt - Symbion Power project manager EA, Brent Laws - Magnis Resources exploration manager
From Left to Right: Peter Gathercole – Symbion Power VP business development EA, Paul Hinks – Symbion Power CEO, Peter Tsegas – Magnis Resources Director, Rod Chittenden – Magnis Resources COO, Han Van der Vlugt – Symbion Power project manager EA, Brent Laws – Magnis Resources exploration manager

The Tanzania Electric Supply Company (TANESCO) has given its in principal approval for Symbion and Magnis to proceed with the development.

Magnis will now undertake further detailed work and complete an environmental impact assessment for the power project. Upon demonstrating the technical, economic and environmental feasibility of the power project, thereafter Symbion will be responsible for funding, developing and building the electricity infrastructure and the Nachu Project will be the offtaker of the power.

Symbion has extensive experience operating power plants and constructing transmission lines in Tanzania and elsewhere in the world, including a 50 MW diesel plant at Arusha, a 55 MW diesel plant at Dodoma and a 120 MW gas turbine plant in Dar es Salaam.

The Nachu bankable feasibility study (BFS) estimates for capital and operating costs relating to power were constructed on the basis of such a third party build-own-operate grid power supply solution.

Magnis Resources' Nachu tenement is located in the South East of Tanzania
Magnis Resources’ Nachu tenement is located in the South East of Tanzania

Study work completed by an Australian Electrical Engineering Consultant provided an indicative power price of between US$0.08 to US$0.10 per kwh for on-grid power. This represents a significant saving compared to other power options such as diesel or heavy fuel oil power generation.

“Magnis has closely studied a variety of power supply options for Nachu and we believe this agreement represents the most attractive and viable pathway to provide a stable power supply for Nachu,” says Magnis chairman Frank Poullas.

“Symbion is a firm with vast experience around the world and especially in the Tanzanian power sector and we look forward to working closely with Symbion to deliver the power project,” he adds.

Nachu graphite project

The Nachu graphite project is located in South East Tanzania approximately 200 km from the Port of Mtwara. The project was discovered in 2013 with a maiden resource announced in November 2014. A Pre-Feasibility Study was completed in December 2014.

On 26 August 2015, an environmental certificate was granted for the project. A Special Mining Licence (SML) was granted in September 2015 for a period of 16 years. The SML covers approximately 30 km² of the existing Nachu exploration licence, contains a suitable area for mine development including the resource areas of Blocks F, FS, J and B.

In October 2015, a mineral development agreement was finalised with the Tanzanian Government for a period of 10 years. The agreement provides the Nachu project with necessary fiscal stability including a 30% tax rate and 3% production royalty.

The company released its positive BFS in April this year, which highlighted the exceptional economic returns and low technical risk of the Nachu graphite project.