Excellent announcement this morning with awesome financial benefits due to the granting of the SEZ license!
“Magnis is the first mining company to achieve these requirements and the EPZA are especially pleased with their commitment to the development and advancement of Tanzanian Industry, particularly with a technology that has focused on environmentally friendly processes.”
Col (retd) J.L Simbakalia
Look at the support Magnis continues to receive from the government!
No other graphite company (KNL, BKT, VRC, WKT etc) or any mining company for that matter in Tanzania has received this license! (even though the scheme has been in operation for 11 years)
My interpretation of today's announcement is as follows:
Magnis intends to build a value adding facility onsite nearby the mine plant operated by a new company Magnis Technologies Tanzania Ltd (MTT). IMO due to using environmentally friendly processing (no acids/harsh chemical for purification) they will easily be able to build this facility without having to redo the EISA.
Concentrate will be sold to MTT for competitive rates (my guess is as low cost as possible) and corporate tax, royalties etc paid on those sales.
MTT will further process the concentrates to either higher purity levels and/or produce spherical graphite.
MTT will be making the sale to end users (assuming off-takes are signed of course) but will be exempt from paying corporate tax (Corporate tax in Tanzania is currently 30%) including the other benefits below.
The result of the above is that once Magnis starts producing and MTT starts processing onsite we will see a huge financial benefit from holding a SEZ license. We should be close to 30% more profitable (due to no Corp tax) on a large percentage of our sales. At least spherical graphite and possibly the larger flake sizes jumbo and super jumbo if MTT can perform any additional processing.
Or Magnis/MTT can reduce prices by 30% and still be as profitable as they would have been without the SEZ license. Any drop in graphite prices in the future will now have less of an impact to the company and ensure we are one of the lowest cost producers!
The above is all IMO based on my interpretation of today's announcement. If you need any further info please search the internet or contact Magnis management
Benefits of Special Economic Zone
Key benefits include the exemption from payment of corporate tax for 10 years, the exemption of taxes and duties for machinery, equipment and construction materials for the development of SEZ infrastructure and the exemption from payment of withholding tax on rent, dividends and interest for 10 years.
(20min delay)