Tanzanian Gold raising US$21.4 million for Africa project

Tanzanian Gold Corp. [TNX-TSX; TRX-NYSE American] said Tuesday February 9 that it has entered into a definitive agreement with several institutional investors for the purchase and sale of 32.9 million shares at US$0.65 in a registered direct offering.

Expected proceeds of US$21.4 million are earmarked for the continued development of the Buckreef Gold Project in Tanzania, including capital expenditures, continued exploration and working capital.

The company also said it has agreed to issue to the investors warrants to purchase up to 16.4 million common shares in a concurrent private placement. The warrants will be exercisable six months after the date of issuance and have an exercise price of US$80 per share.  The warrants will expire five years from the date of issuance. Closing of the offering is expected by February 11, 2021.

Tanzanian Gold shares fell 9.3% or $0.09 to 88 cents on volume of 291,680. The shares are currently trading in a 52-week range of $2.12 and 55 cents.

Tanzanian Gold, along with its joint venture partner, state mining company STAMICO – are building a significant gold project at Buckreef based on an expanded mineral resource base and the treatment of mineable mineral reserves in two stand-alone plants.

STAMICO owns a 45% non-dilutable equity interest in Buckreef Gold Co., the company that owns the project. The Buckreef Gold Mine was an underground mine operated by the Tanzanian State during the 1980s.

The project is located in north-central Tanzania, immediately south of Lake Victoria. The project area consists of the dormant Buckreef Gold Mine and four prospects with known mineralization: Buckreef, Buziba, Tembo and Bingwa.

Buckreef hosts a measured and indicated mineral resource of 36 million tonnes at 1.77 g/t gold or 2.03 million ounces. Inferred resources are 17.8 million tonnes at 1.11 g/t gold or 635,540 ounces.

The company said it is actively investigating and assessing multiple exploration targets on its property.

Tanzanian Gold has said it plans to initiate a preliminary economic assessment (PEA). Depending on the outcome of the PEA, it expects to undertake a definitive feasibility study as part of the process to fast track the project to production.