CHINA'S insatiable demand for commodities has found its way to country Victoria, with AGD Mining securing a $52.5 million supply deal with China's Zhongnan Antimony and Tungsten Trading Co for production from its Costerfield antimony and goldmine.
Production from Costerfield, in central Victoria, starts late next month, with the Zhongnan offtake agreement covering 75 per cent of the mine's antimony concentrate production for the first three years of the mine's life.
Based on current metal prices, Costerfield is poised to generate a free cash flow of $15 million a year. Antimony concentrates from Costerfield will grade about 60 per cent of high-value antimony and about 80 grams of gold a tonne. Costerfield will produce 21,000 ounces of gold and 5500 tonnes of antimony concentrate annually. Gold output comes from 14,000 ounces in the antimony concentrate and 7000 ounces of free gold.
Outside of the offtake agreement, AGD will still have available for sale the free gold and 25 per cent of the antimony concentrate production.
The offtake arrangement comes as AGD's controlling shareholder, Cambrian Mining, prepares to send out takeover offer documents to AGD shareholders. AGD directors have recommended the scrip offer, subject to a satisfactory report from the independent expert and in the absence of a higher offer.
