(Yicai) May 20 -- Shares of Shenghe Resources Holding rose after the Chinese miner said it will acquire heavy mineral sand projects in Tanzania to guarantee supply of the ore deposits.

Shenghe [SHA: 600392] finished 3.5 percent up at CNY10.52 (USD1.45) in Shanghai today.

Under the AUD43 million (USD28.8 million) deal, Shenghe subsidiary Chenguang Rare Earths New Material will buy Strandline Resources’ unit Strandline Resources UK, or SRUL, to obtain equity in four heavy mineral sand projects in Tanzania, its Chengdu-based parent company said yesterday.

Heavy mineral sands are mined mainly for their valuable heavy minerals such as ilmenite, monazite, and zircon, which have a range of industrial uses.

About AUD27.2 million will be used to buy all of SRUL, while the remaining AUD15.8 million will be used to repay loans provided by Strandline for the Tanzanian projects.

SRUL has an 84 percent stake in Nyati Mineral Sands, a heavy mineral sand producer that owns the Fungoni, Tajiri, Sudi, and Bagamoyo projects in Tanzania. The first two have mining certificates, while the other two are still in the exploration stage. 

The Fungoni project, which is around 25 kilometers from Dar es Salaam Port, has 22 million tons of mineral ore deposits, calculated under the Joint Ore Reserves Committee Code, Shenghe noted. The Tajiri project in Tanzania’s north has a 268-million-ton deposit, per the same code. 

SRUL had CNY75.1 million (USD10.4 million) of assets and CNY66.3 million of liabilities at the end of last year, resulting in net assets of about CNY8.8 million (USD1.2 million). The firm reported a net loss of CNY1.1 million for last year. 

Editor: Futura Costaglione