Tanzanian Royalty and Songshan Mining sign option agreement

In a deal that brings together two of his interests — Africa and the emerging economies of Asia, and in particular China — James Sinclair, chairman and chief executive of Tanzanian Royalty Exploration Corp. (TNX-T, TRE-x) has signed a royalty option agreement on the company’s Kabanga nickel properties with Songshan Mining of Inner Mongolia.

Under the agreement, Songshan Mining has an option to acquire Tanzanian Royalty’s interest in its Kabanga nickel licences in northwestern Tanzania, subject to a 30-year, 3% net smelter royalty in favor of Tanzanian Royalty.

Songshan Mining currently operates two iron ore mines. It is based in Duolun city in southeast-central Inner Mongolia near the border with Hebei. (Of all of China’s provinces and autonomous regions, Inner Mongolia is the third-largest.)

Sinclair declined to be interviewed about the agreement. But in a prepared statement he said it was his wish “to be associated with mining exploration participants that represent the region of significant new primary demand,” adding that China was well positioned in his view “to suffer less and recover first from present world economic conditions. It has a long-term economic plan, and is motivated by the need for resources, not year-to-year price fluctuations, when identifying properties of interest.”

Tanzanian Royalty’s 4,200-sq-km Kabanga properties have targets for nickel, cobalt and platinum group element mineralization and are in the same belt as Barrick Gold‘s (ABX-T, ABX-n) and Xstrata‘s (XSRAF-O, XTA-L), Kabanga project, a massive sulphide deposit in northwestern Tanzania.

The Kabanga project is about 40 km south of Ngara, near the Burundi border, and about 240 km west of the main regional centre of Mwanza.Tanzanian Royalty’s project area is within Proterozoic-age sediments of the Karagwe-Ankolean sequence of northwestern Tanzania, and is strategically situated to the north of the world-class Kabanga nickel project.

Principal rock types include metamorphosed sandstones, quartzites, shales, red beds, dolomitic limestones and cherts.

The region is tightly folded, with fold axes trending north-northeast.

Individual licences have been selected proximal to strong aeromagnetic anomalies, believed to be an important stratigraphic control on nickel-copper-platinum group elements mineralization in the region, and known gabbro/norite bodies.

At presstime in Toronto, Tanzanian Royalty was trading at $5.21 per share and has a 52-week trading range of $1.99-$6.32 per share. The company has 89.1 million shares outstanding.