that perhaps could be the case, though looking at transamine’s other offtake deals, it seems they pay whatever the current spot/benchmark price is at time of shipment. So no price floor or ceiling, and it means that they must have to on-sell it at above current spot/benchmark price in order to make any margins out of the transaction.
or perhaps they earn their money via transaction fee? They on-sell it to customers and earn a fee for supplying customers with the product?
or perhaps they are planning to stockpile it and on-sell it in the future at a much higher price when demand is soaring again?
or perhaps this is all just a clever use of a neutral party to effectively have an Australian company supply product to a Chinese customer during a time when both countries aren’t on the best of terms? Australian companies have probably been told to try and diversify from China, and Chinese companies have probably been told to boycott australia. However, the Chinese won’t be boycotting Australia’s rare earths because they are dependent on them. So with both companies going through a neutral European party, every party involved wins and no one else is the wiser
who knows what the terms are/will be. But I am anticipating it to become binding once the updated DFS proves that there will be enough concentrate available to supply Transamine with the full 250,000t they are wanting. This is a given, but even so, need the DFS to prove the case.
IMO
GLTAH
In previous agreements, transamine has also purchased concentrate in advance, charging a LIBOR plus small interest rate for doing so. I don’t know how deep their pockets are, but if they were to purchase their first years concentrate from us in advance, and if we were to use a current spot price of say USD$475/t (AUD$730/t), then that would be AUD$730/t x 50,000t = $36.5mil. This could be a potential way of coming up with the money and financing the project. And if the small interest rate and LIBOR was to total something like 5% interest p.a. on the advanced purchase amount, then that’s what? $1.8mil per annum in interest? Not really breaking the bank there.
The announcement does say additional option for financing facility with transamine. Perhaps this is also how transamine makes money out of it
CXO Price at posting:
6.0¢ Sentiment: Buy Disclosure: Held
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