Malawian minerals sands explorer Chilwa Minerals (ASX:CHW) has struck a technical and associated services agreement with a subsidiary of its major shareholder, the Mota Engil Group.
Under the deal, the Mota Engil subsidiary will supply Chilwa with accommodation and office facilities in Malawi, technical and administrative support staff, 4-wheel-drive and support vehicles, and other infrastructure, all for a neat discount compared to if Chilwa had sourced these services from third-party suppliers.
The arrangement extends the existing agreement between the two businesses that Chilwa first signed when it listed on the ASX back in July 2023.
Chilwa Managing Director Cadell Buss says the services deal comes as the company works to delineate and develop a large-scale mineral sands project in Malawi.
“Having the ability and flexibility to scale up and down operations as required is a significant benefit to the company, and we couldn’t be more pleased with the willingness to help from Mota Engil.”
Chilwa’s flagship Lake Chilwa Project in Malawi comprises four main deposits dubbed Halala/Namania, Mposa, Bimbi, and Mpyupyu.
The $11.76 million market capitalisation company in July 2022 reported an inferred mineral resource estimate for the project of 2.4 million tonnes of total heavy minerals (THM) at a 1% TMH cut-off.
Alongside today’s new services agreement, Chilwa has separate agreements in place with Mota Engil Mozambique for the provision of drilling services, including a current sonic drill rig at the project and a planned diamond drill rig set to begin spinning in late February.
As with the services and infrastructure, Chilwa says the rates for the drilling services are provided at a ‘significant discount’ compared to if the company contracted other third parties not related to its major shareholder.
Chilwa Minerals had around $6.37 million cash and cash equivalents at hand as of 30 September 2023, according to its latest quarterly report.
Write to Joshua Smith at Mining.com.au
Images: Chilwa Minerals
