Aminex PLC (LON:AEX) shares jumped higher on Wednesday as it told investors that it has agreed an advance of a US$2mln loan from incoming partner ARA Petroleum to pay a tax in Tanzania so that the farm-out transaction can complete.
The move will then allow Aminex and ARA to advance work programmes on the Ruvuma project and see the Ntorya discovery move towards development.
In a statement, the company noted that the Tanzanian authorities require a capital gains tax (CGT) charge of US$2.2mln to be paid before the Minister of Energy will approve the farm-out transaction.
Aminex noted that it had disagreed with the basis for the CGT calculation, but, following a period of intensive discussions and to avoid any significant further delay it decided that it was in the company’s best interest to accept the tax charge and expedite the transaction.
"This agreement is an important step in what has been a long process towards the farm-out with APT and brings first gas from the exciting Ntorya Gas Field ever closer,” Robert Ambrose, Aminex chief executive said in a statement.
“Once the Farm-Out is complete Aminex and Ndovu will look forward to working with APT as we endeavour to extract this important resource for the benefit of the people of Tanzania."
Once executed, the farm-out deal will see Aminex carried for US$35mln of its share of costs as Ntorya is advanced into development.
It will effectively mean that Aminex is fully-carried through to material gas production is established at the Ntorya gas field, the company noted.
Aminex will be due US$5mln in cash upon completion of the transaction plus US$1.97mln of cash over six monthly instalments to reimburse back costs.
A loan agreement was put in place between Aminex and ARA back, to be paid from the farm-out consideration, and to date, US$2.33mln has been drawn down.
Aminex shares jumped 20% to 0.83p in Wednesday’s early deals.