AVZ Minerals Ltd(ASX:AVZ) (OTCMKTS:AZZVF) (FRA:3A2) has signed a binding offtake agreement for the sale of tin concentrate from the Manono Project in the DRC to Kalon Resources Limited, a 100%-owned subsidiary of Noble Group Holdings Limited.
The three-year binding offtake agreement is for the sale of 600 tonnes of tin concentrate per annum from the Manono Lithium and Tin Project.
It is the first tin offtake deal for Manono and equates to approximately 43% of the proposed total tin concentrate that will be available for sale.
Shares have been as much as 7.5% higher this morning to A$0.215 while AVZ's market cap is approximately A$578 million.
“Significant agreement for Manono”AVZ managing director Nigel Ferguson said: “We are very pleased to have finally signed with Kalon, our first tin offtake agreement – just weeks after having signed our second lithium offtake agreement that cumulatively provides binding commitments for more than 50% of our saleable SC6 product.
“Given the rising LME cash price of tin metal, up approximately 30% YTD, this offtake agreement is significant for the Manono Project and also significant given that Kalon is a considerable participant in the tin industry.
“While this agreement represents a relatively small, but growing portion of revenue for the Manono Project, it does confirm another large international business is willing to secure future supply from the project.”The agreement was completed by AVZ’s 100%-owned entity AVZ International Pty Ltd acting on behalf of the seller - Dathcom Mining SA.
Industrial minerals traderKalon specialises in the physical commodity trading and supply chain management of industrial minerals and metals including concentrates of tin, tungsten, niobium, tantalum, alumina, aluminium and special ores such as chrome, manganese and iron ore.
The Noble Group subsidiary has a global footprint and works in close partnership with mining companies, mining communities, mineral processing facilities and industrial end-users with teams in Singapore, Hong Kong, China, South Africa, Rwanda and Brazil and handles several thousand tonnes of tin concentrate per annum.
Key termsThe key terms of the offtake agreement with Kalon include:
- Term: three-year term;
- Annual supply of 600 tonnes of tin concentrate (+/-20% in seller’s option);
- Product specifications: minimum 55% tin content, with expected typical product grade between 60 and 70% tin;
- Pricing formula linked to LME tin price (exact terms are commercial-in-confidence);
- Delivery Point: Free Carrier (FCA), bonded warehouse Lubumbashi;
- Provisional payment for each shipment via telegraphic transfer against loading documentation at the delivery point; and
- Agreement by the parties to place an importance and focus on environmental, social and governance (ESG) development through the commercial partnership.
Meeting financing conditions
Ferguson said: “Similar to our recent lithium offtake agreements, this tin concentrate offtake agreement with Kalon will assist the company in meeting certain conditions precedent which are required from our prospective financiers.
“Again we look forward to finalising some further offtake agreements for the remainder of the project’s products to satisfy some of the criteria our potential lenders have requested.”
From P r o a c t i v e I n v e s t o r s
