TRF 0.00% 1.9¢ trafford resources limited

iron ore financing deal must be near, page-31

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    Definition of 'Offtake Agreement'


    An agreement between a producer of a resource and a buyer of a resource to purchase/sell portions of the producer's future production. An offtake agreement is normally negotiated prior to the construction of a facility such as a mine in order to secure a market for the future output of the facility. If lenders can see the company will have a purchaser of its production, it makes it easier to obtain financing to construct a facility .

    Investopedia explains 'Offtake Agreement'


    Offtake agreements are frequently used in natural resource development, where the capital costs to extract the resource is signficant and the company wants a guarantee that some of its product will be sold. Companies can usually back out of an offtake agreement through negotiations with the other party and with the payment of a fee.


    Check Syrah Resources SYR recent Offtake Agreement with Chinalco for Graphite.

 
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