What's next for Kibaran?

Two months ago we were lauding the Kibaran management team for delivering an updated BFS which demonstrated a profitable and robust 60ktpa mining operation. A week after the updated BFS was released our MD, Andrew Spinks ("AS"), set off to the east coast for a four day roadshow. We started to see some decent-volume buying flow into the stock, even reaching a high of 20.5c (which we last saw on 23rd March), and then the Tanzanian legislative changes ("BSE" - Black Swan Event) occurred and a huge sell-off saw the share price plummet to 12c, its lowest level since 23/12/2014.

Now that the dust is starting to settle, and bit by bit we are getting some clarity of how the legislative changes will impact KNL and the mining industry more broadly, the question must be asked; "What's next for Kibaran?".

Let's start with what has happened since the BSE;

20-Jul-2017: Company announces "...the amended Environmental Impact Assessment Certificate for the Epanko Graphite Project has been signed by Tanzania’s Minister of State in the Vice President’s Office, the Honorable January Makamba (MP)."

3-Aug-2017: Company announces "...successful production of battery anode material using Epanko Battery (Spherical) Graphite, which was produced using Epanko graphite, at a leading lithium-ion battery facility in Germany."

In addition to the above, finance discussions with KfW IPEX-Bank and Nedbank were recommenced following the completion of rigorous due diligence of the BFS by bank-appointed Independent Engineers, SRK Consulting. Australia’s Export Finance and Insurance Corporation has also come into the fold, although we have little information regarding their involvement. After the BSE, according to KNL announcements, both KfW and Nedbank have reaffirmed their commitment to work with KNL to progress the debt financing program.

What are some of the immediate issues facing us?

1) Mining Licence - will we have to re-apply for it, or have it amended?
2) Will the 16% free-carried interest apply to Epanko?
3) Will we have to amend the updated BFS in light of the legislative changes?

Until the release of more detailed regulations, "specifically in relation to the structuring of international finance arrangements and potential Government participation in the Tanzanian minerals sector", it is a little difficult to answer the above with absolute certainty, however based on my research and discussions I have had, I have formed a reasonably informed view based on my understanding.

Answers to the above questions/issues:

1) KNL has a 100% proprietary interest in the ML. If the 16% free-carried interest applies to Epanko (which I have made my investment decision on the assumption that it will), it is my understanding that the ML will need to be amended to reflect the change in the ownership structure/interest.  
2) I am reading more and more articles that are suggesting that the 16% free-carried interest won't apply to all mining operations. Until such time as the Tanzanian government expressly says that this won't apply to KNL, I'm going to assume that it will apply.
3) An addendum to the updated BFS will be necessary. This will only require the financial model component of the BFS to be amended to reflect the 1% inspection fee & possibly the 16% free-carried interest. This shouldn't delay the progress of the financing discussions.

Whilst we still have some outstanding issues that need to be clarified and/or addressed, and there still remains some sovereign risk issues, my research and conversations with various people lead me to believe that the mining industry in Tanzania can still thrive and foreign investment will be welcomed by Tanzania on mutually beneficial terms.

I haven't mentioned the DFS for the SGP. Why? Because we've got to develop Epanko before we can do anything. First things first.