The Tanzanian government has approved Aminex to proceed with the farm out of its Ruvuma interest to ARA Petroleum Tanzania.
As such, the farm out should be completed within the next few days, Aminex said. The company’s subsidiary Ndovu Resources will transfer a 50% stake to ARA. The entrant will also take the role of operator.
“We are delighted to finally receive government approval of the farm-out and would like to thank all agencies of the Tanzanian government that were involved in the process. We would also like to thank ARA Petroleum for its invaluable assistance and support in securing government approval of the farm-out and in advancing $5m to the company over the past 12 months,” said the company’s CEO Robert Ambrose.
The executive went on to say the company was looking “forward to completing the transaction within the next few days and handing operatorship over to [ARA].” Aminex, in its half-year report in September, said the final long-stop date for the agreement was October 15.
Aminex announced the signing of the farm-out deal in July 2018. At that point, the company expected to complete the deal in November 2018.
The Tanzanian government has a reputation of taking a tough line on foreign interests, particularly around M&A.
Aminex agreed to pay the tax bill demand from the Tanzania Revenue Authority (TRA) in May this year. The company said it disputed the basis the bill was based upon but that it was in its best interests to agree in order to make progress.
The capital gains tax bill on the sale was $2.2 million. In order to cover this, Aminex had to borrow cash from ARA.
The company borrowed $3mn in November 2019 and another $2mn early this year. In September, the company said ARA had agreed to another advance of $1.97mn.
Aminex was due to receive a $5mn payment in cash on completion of the deal and $1.97mn in costs.