Ann: Pilbara Signs DSO Mine Gate Sale Agreement, page-57

Innovative Pilbara-Atlas deal ‘won’t be the last’

• The West Australian
• 21 Dec 2017
• Stuart McKinnon

Pilbara Minerals yesterday struck an innovative mine gate sales agreement with Atlas Iron and announced a two-year tantalum offtake deal with Global Advanced Metals.
Under the terms of the Atlas deal, the iron ore miner will buy between 1Mt and 1.4Mt of lithium direct shipping ore from Pilbara’s Pilgangoora lithiumtantalum project over 15 months, transport it to its Mt Dove crusher and export it using its existing Utah Point facilities at Port Hedland. First shipments are scheduled for the June quarter of next year.
Atlas said it expected to generate operating margins of $15$20/t from the agreement after allowing for payments to Pilbara, including an upfront prepayment of $US3 million, and its own transport and crushing costs. China’s Sinosteel is the anticipated buyer of the ore under an agreement to be entered into with Atlas.
The deal allows Atlas to diversify its operations from its increasingly marginal, lowgrade iron ore business and utilise excess capacity at its facilities in the Pilbara. It also provides a passage for Pilbara Minerals to transport and ship its ore, deriving early cashflow from its Pilgangoora project, which is expected to produce a higher grade spodumene product by the middle of next year.
Atlas managing director Cliff Lawrenson said the agreement marked the start of the next chapter in Atlas’ growth.
“This is the first revenue earning agreement we have reached and it will not be the last,” he said.
Pilbara Minerals managing director and former Atlas Iron boss Ken Brinsden said the arrangement represented an outstanding example of co-operation between two miners and allowed the company to leverage off Atlas’ established infrastructure and logistics chain with minimal additional capital outlay.
Under the deal with GAM, Pilbara will supply 100,000lb of 4 to 5 per cent tantalum concentrate from Pilgangoora, covering a portion of estimated annual production. Pilbara says the balance is expected to be sold as a higher value 25 to 30 per cent product.