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Strandline Resources acquiring Tanzania-focused Jacana Resources

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Strandline Resources (ASX:STA) has executed a binding heads of agreement to acquire a subsidiary of Jacana Minerals, which was spun out of Syrah Resources (ASX:SYR) in 2014.

The acquisition secures one of the last underexplored pieces of the East African mineral sands producing corridor, a corridor which boasts over 10 major operating mineral sands mines and deposits.

Upon completion of the acquisition, Strandline will not only be better funded, it will also hold a dominant 3,500 square kilometre mineral sands exploration position in Tanzania, the last underexplored piece of the East African mineral sands producing corridor.

Neighbours include Rio Tinto (ASX:RIO), Kenmare Resources (LON:KMR) and Base Resources (ASX:BSE).

Strandline also holds the construction ready Coburn HMS Project in Western Australia.

“Strandline has secured an excellent opportunity to combine with the assets and team of Jacana to build a serious mineral sands player,” managing director Richard Hill said.

“The acquisition will see Strandline augment an already strong mineral sands portfolio and become better funded for our exciting future.

“This puts Strandline in a very envious position for future exploration success, and for any majors wanting entry into the last underexplored piece of the East African coastline.”


Acquisition

Strandline is acquiring Jacana Resources Tanzania (JRT) and $1.5 million in cash from Jacana in return for 500,385,220 STA shares.

This is subject to a number of conditions including:

- Confirmation from ASX that the acquisition is not a transaction that will require Strandline to re-comply with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules;
- The approval of Strandline’s shareholders at a general meeting;
- All Tanzanian regulatory and governmental approvals being obtained for the Acquisition;
- Each party being reasonably satisfied with due diligence investigations in relation to the other; and
- No material adverse change occurring in relation to Jacana, JRT or STA in the period from the date of signing of the HOA and completion of the Acquisition.

The outstanding conditions are expected to be satisfied or waived by mid-June 2015 to allow for acquisition completion.

Jacana plans to distribute the STA shares to its shareholders, none of which will hold more than 7.8% in the enlarged Strandline.

On completion of the acquisition, Jacana will appoint its executive chairman Tom Eadie and non-executive director Mark Hanlon as non‐executive directors of Strandline’s board.


JRT Assets

JRT assets include high potential, underexplored, advanced exploration projects and an Indicated Resource, as well as large areas of well-located unexplored ground. In addition, JRT has strong graphite, nickel and coal prospects.

Its strongest prospects include the rutile-rich Tanga North prospect, the high grade areas south of Tanga (Tongani and Tajiri) and the zircon-rich Indicated Resource at Fungoni of 11 million tonnes at 3.1% heavy minerals.

All of these prospects, and the surrounding exploration areas, need more drilling to assess their large, high-grade potential.

Fungoni is located on the northern coast of Tanzania about 25 kilometres southeast of Dar es Salaam.

Potential for further discovery is excellent with no holes yet drilled away from the known resource.

Tanga North is just south of the Kenyan border and has mineral assemblage of the heavy mineral concentrates averaging 38% ilmenite, 18% rutile and 5% zircon.

Meanwhile, the Tongani and Tajiri prospects tend to have a high value mineral assemblage with about 75% ilmenite, 7%-10% rutile and 4%-6% zircon.

Tanga is close to Base Resources’ operating Kwale Mine (262 million tonnes at 3.7%HM) in Kenya.

Aircore drilling is planned in mid-2015.


Recent Activity

In March, Strandline confirmed the presence of high grade zircon and a high portion of Valuable Heavy Mineral at the Madimba HMS Project in Tanzania.

Better drill results included:

- 7 metres at 7.06% Total Heavy Mineral (THM) from surface ending in 12.36% THM;
- 7.5 metres at 4.10% THM from surface ending in 4.8% THM;
- 6 metres at 3.42% THM from surface ending in 3.31% THM.

Mineralisation remains open at depth with follow-up drilling planned. In addition, the discovery is close to key infrastructure, including Mtwara Port and associated facilities within 20 kilometres.

The company has also identified new high grade heavy mineral sands targets in Tanzania from a mapping and sampling program conducted in late 2014.

Two of the priority locations are located on Mafia Island in central Tanzania and another at the Kiswere Project in southern Tanzania.


Analysis

Strandline’s acquisition of Jacana Resources (Tanzania) Limited at the bottom of the price cycle will create a mineral sands house that is significantly leveraged to Asia’s transformation into a consumer-driven economy.

JRT is an unlisted explorer with excellent mineral sands prospects and about $1.5 million in cash. It has an implied value of about $5 million.

Together Strandline and JRT have a commanding 3,500 square kilometre exploration package in Tanzania within the world’s major mineral sands producing corridor.

In addition, Strandline continues to hold the construction ready Coburn HMS Project.

Management is another strong point with former executives from Iluka, Rio Tinto and Syrah.



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