DAR ES SALAAM, TANZANIA - Tanzanian Royalty Exploration Corporation Company is set to construct a US$25 million gold plant at the Buckreef Gold project in the gold rich belt around Lake Victoria.
The firm will be reviving an old reef mine which has been abandoned for decades.
According to Mr James Sinclair, the Company's President and Chief Executive Officer, the firm is currently in discussions with international consulting firms with respect to a turnkey price for the construction of plant and mine-related facilities at the Buckreef Gold Project.
He said "To speed up development of Buckreef Gold Project in Tanzania, which hosts approximately 2.0 million ounces of 43-101 compliant resources at a 0.5 g/t cut-off grade gold, the firm will inject a $25 million obtained from the bought deal offering.
"The amount will see the completion of a feasibility study on the mine located in the Rwamagaza greenstone belt, 115 kilometer South West of Mwanza city," said Mr. Sinclair.
"To obtain $ 25 million", he said "the firm has entered into an underwriting agreement with Casimir Capital Ltd".
According to Mr. Sinclair, the Underwriter has agreed to purchase 4,237,289 units of the Company on a bought deal basis at a price of US$5.90 per unit, for sale to the public in Canada and the United States.
Each Unit consists of one common share of the Company and one common share purchase warrant exercisable at a price of US$7.00 per warrant share for a period of two years following closing of the offering.
The Units will be offered by way of a short form prospectus in the provinces of British Columbia, Ontario and Alberta and will be offered in the United States pursuant to a registration statement filed under the multi-jurisdictional disclosure system.
"In consideration for the services to be rendered by the Underwriter under the Offering" the firm says, "the Underwriter will receive a cash commission of 7% of the gross proceeds of the Offering and compensation warrants entitling the Underwriter to purchase, in the aggregate, that number of Common Shares that is equal to 7% of the aggregate number of Units sold pursuant to the Offering."
Mr. Peter Zizhou, the Exploration Manager of Tanzanian Royalty Exploration Corporation Limited said that "of particular interest to our company is the Buckreef Eastern Porphyry area where the potential to establish additional resources along a continuous mineralized zone that is known to extend for at least 300 metres has yet to be fully evaluated.
"If these projects unfold as expected they could be major cash generators to further development work at Buckreef" he said.
In addition to the Buckreef Feasibility Study, some of the funds will be allocated to plant and equipment purchases for the mining of surface gravels at Buckreef and on the Company's Kigosi and Lunguya prospects where gravel deposits of commercial interest are also indicated.
"We are not looking at a Cadillac operation - more of a Ford in fact - that will generate the returns that shareholders expect and deserve from such a robust gold mining project," said Zizhou.
He said that a major priority for the Company will be the initiation of exploration work along established mineral trends within the Buckreef Project area.
According to Tanzanian Royalty Exploration Corporation, Buckreef is licensed for mining and in fact saw some commercial production as an underground producer during the 1980s.
In May this year, the Company announced that it has completed a detailed review of historical diamond drilling results on the Buckreef Main, South and North Prospects which form the core of its recently acquired Buckreef Gold Project in Tanzania.
Several drilling programs were conducted on the Buckreef property between 1995 and 2004 by Kinross Gold, East Africa Mining, AngloGold Ashanti, Spinifex Gold and Gallery Gold among others. These drillings targeted the main strike and down dip extension of the Buckreef shear zone along a strike length exceeding one kilometre.
According to the statistics available to the ministry of energy and minerals, Tanzania stands as a third largest producer of gold in Africa after South Africa and Ghana and is also well known for the Tanzanite gemstones. In addition to gold, the country has expansive amounts of natural resources including gas, uranium, diamonds, coal, iron ore, nickel, copper, chrome, tin, platinum, coltan, niobium, kaolin and other minerals.