Tanzanian State to Become Joint Venture Partner
Lake Victoria Gold Limited. (TSXV: LVG; FRA: E1K), formerly Tembo Gold, reports further progress in transferring the Imwelo mining license in Tanzania. Parallel to formal coordination with authorities, the company has already procured a suitable ball mill in South Africa and is modifying it for the project. A 15% down payment has been made to secure the mill. With this step, Lake Victoria Gold aims to ensure that Imwelo can start production as planned within 12 months.
The final detailed planning for the mine, including electrical, steel construction, and piping, has been awarded to the South African engineering firm Turaflo Pty Ltd. It is scheduled to be completed by the end of February. Lake Victoria Gold reports that 90% of the compensation for the relocation of land users has been paid. The compensated land users have 30 days to vacate the area.
Simon Benstead, Executive Chairman CFO of the company, stated: “Our priorities are to obtain the final on-site approvals while advancing Imwelo towards production. We are on track to make 2024 a transformative year for Lake Victoria Gold as we continue to grow, diversify, and consolidate.”
The Tanzanian State to Become Joint Venture Partner
According to the Mining State Participation Regulations in effect since September 2022, the Tanzanian state may acquire a non-transferable minimum stake of 16% in the company that will hold ownership of the Imwelo project. Additionally, a royalty to the Tanzanian government on the gross value of minerals produced in the Imwelo project will be due at a rate of 6% for gold. Lake Victoria Gold has submitted a corresponding framework agreement (First Schedule of the Regulations) regulating the establishment of a joint venture company with the state shareholder. In parallel, Lake Victoria Gold is clarifying further bureaucratic details with the tax authorities.
To transfer the mining license to the company’s subsidiary in Tanzania, Lake Victoria Gold also needs the consent of the so-called Fair Competition Commission (“FCC”). The company submitted an approval application before the end of 2023. The FCC has determined that the merger application and all submitted documents were complete and that the review of the transaction approval can proceed. The FCC has committed to granting approval within 90 days of December 18, 2023.
Taifa Mining Designated for Contract Mining at Imwelo
As is known, Barrick Gold and the private Tanzanian conglomerate Taifa Group have stakes in Lake Victoria Gold. The Taifa Group, through its subsidiary Taifa Mining, will conduct all contract mining and construction work for the Imwelo project. Taifa Mining is Tanzania’s largest mining company with over 30 years of experience in mining. Taifa is the preferred contractor for most mines in Tanzania and maintains long-standing and successful relationships with companies such as Petra, De Beers, Barrick, and AngloGold Ashanti. Furthermore, Taifa owns the largest fleet of mining equipment in Tanzania. As a company, Taifa is committed to adopting and adhering to the latest internationally recognized standards in all aspects of its business.
Conclusion: The bureaucracy in Tanzania is not to be underestimated, but it works. Lake Victoria Gold can rely on the Fair Competition Commission giving its vote by March 18 at the latest. There’s also a lot to do otherwise: tax issues need to be clarified, compensation and relocation of land users is progressing, and in parallel, the detailed mine design should be available by the end of February. The Tanzanian state itself should have an interest in Imwelo starting production quickly. The state is set to benefit from production as a future joint venture partner and through royalty payments. Last but not least, Lake Victoria Gold has Taifa Mining, a private partner established in the mining industry, by its side. The signs for Lake Victoria in Tanzania point towards growth.
