Togo: Keras transfers its stake in the Nayega project to the government

Friday, 19 May 2023 17:34
Togo: Keras transfers its stake in the Nayega project to the government

(Togo First) - Togo wants to double the contribution of mining to its GDP by 2025. To do so the country relies on the recovery of its phosphate industry, and its manganese-rich subsoil. 

Togo’s government inked with the British firm Keras Resources a deal that will double the mining sector’s share in the country's GDP by 2025. Under the deal, Keras gave up on its operating permit for the manganese-rich Nayéga project. Now, the permit is exclusively held by Société Togolaise de Manganèse, a 100%-State owned company established in April 2023. 

According to the agreement, Keras will transfer “its intellectual knowledge on Nayéga to the State, and provide consulting and brokerage services to accelerate Nayéga’s development”. The British firm, which ran the project for many years, will also start selling its participation in SGM, the subsidiary through which it held a stake in the project.

In return for the participation, the State will pay Keras $1.7 million in cash on July 17, 2023. Additionally, Keras will receive 1.5% of the gross revenues from the mine for its consulting services for three years, and 6% of the gross revenues from the asset for its brokerage services for three years or 900,000 tons of enriched manganese ore produced and sold from the mine.

“This Agreement is a reflection of the constructive relationship we have with the State and sets a very clear picture of how the asset will now be developed to the benefit all stakeholders and reward Keras for its investment to date,” said Graham Stacey, CEO of Keras. He added that the company would begin a transition to focus on its Northern American projects. 

A good formula for Togo? 

The deal aligns with the objectives that Togo announced when it created the Société Togolaise de Manganèse in April. Indeed, the company was tasked with enhancing the country's manganese reserves in a bid to “double the mining sector’s contribution to GDP by 2025”.

The first hurdle the public company will have to overcome is to realize Nayéga’s potential. A project which hosts mineral resources of 13.97 million tonnes grading 12.4% manganese and ore reserves of 8.48 million tonnes grading 14% manganese.

According to Agence Ecofin, production at Nayéga was initially expected to start in 2020 at a nominal monthly capacity of 6,500 tons of marketable ore but these milestones were not met, and works were suspended to allow the State to negotiate better terms for the project.

Though the new deal could be the right formula to restart the project, only the following developments will tell more about the plans of Sociéte Togolaise de Manganèse. Will the firm stand by Keras’ initial plans and when will production begin?

While these questions remain unanswered, the manganese sector continues to face new challenges, with increased needs in steelmaking and growing demand for electric batteries. The ore, according to a report that Ecofin Pro released earlier this year, is “an additional asset for the African continent in the industry of tomorrow.” Africa, let’s emphasize, produces more than 60% of the world’s manganese output, and several African countries, such as Togo, South Africa, Gabon, Ghana, Ivory Coast, and Botswana, are positioning themselves to take advantage of new opportunities in this market.

Louis-Nino Kansoun 

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