Reports Leo Odera Omolo
Reports emerging from Dar Es Salaam and Arusha says Tanzania will soon start exploiting its nickel deposits in Dutwa area in Northern part of the country, with the injection of USD 5 million IN TO PROJECT BY THE International Finance Corporation {IFC}.
The money will go towards concluding a feasibility study of the project. In turn IFC- the private sector arm of the World Bank Group – will take up a 10 per cent stake in African Eagle Resources, the mineral development firm behind it.
The study is scheduled for completion by the end of this year {2012}.The IFC has already signed an equity subscription agreement with African Eagle Resources, a UK incorporated company that discovered the nickel deposits in 2008.This will culminate in the issuing of 45,509,570 ordinary shares in the company to IFC.
In a statement issued late last week, the firm said, ”For every two new shares subscribed for, IFC will receive a warrant to purchase one further share at a price per share of 150 per cent of the placing price, exercisable for four years. Accordingly, on closing of the placing, IFC will hold 22,754,755 share purchase warrant.
The agreement also gives IFC a pre-emptive right to participate in any future equity or equity linked financings in order to allow it to maintain its 10 per cent ownership in the firm.
“Africa Eagle Resources has agreed publicly to disclose any material payments to the Tanzania government, as per IFC’s requirements,“ it added in the statement.
The ongoing feasibility study, which IFC has boosted and is slated for completion this year, is set to be used by the firm to secure financing for resource exploitation. Findings of an economic model that was developed through a study commissioned by the firm projected that up to USD 10.2 billion would be raked I its 26 years lifespan.
The head of mining at IFC, Tom Butler, said that the Dutw project has the potential to become “a major African nickel producer should the current feasibility study work continue to be successful.”
In the statement released Mr Butler said the IFC would help to implement environmental and social best practices for its mining activities.
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