StratMin Global's offtake deal marks "turning point", says...

StratMin Global's offtake deal marks "turning point", says Yannaghas By Giles Gwinnett October 21 2014, 4:58pm

A new offtake deal for StratMin Global Resources (LON:STGR) marks a "turning point" for the firm, managing director Manoli Yannaghas has told Proactive Investors. The signed agreement is with one of the world's largest independent graphite processors and merchants and became effective yesterday (October 20).

The buyer will purchase all material from the group's Loharano mine in Madagascar that StratMin can produce within the product specification determined. "We've been able to produce for a while but we haven't been able to sell. Now we can do both," said Yannaghas. "So we're going to see the company start to become cash flow generative over the next quarter, which is really exciting for us." He said StratMin had achieved a very good initial price, which was "fantastic" for the firm. "And it's an FOB agreement - free on board - which means that we sell it out of the port in Madagascar," he added. "If the price goes up we want to make sure our price goes up too and the company and the shareholders receive the benefit from that," said the MD.

Within the initial five years, StratMin and the buyer will agree in advance the pricing for the six months ahead to allow both parties to reset prices to reflect any changes in the open market. The agreement also sets the first 12 months' volumes, grades and fraction characteristics, which will be subject to an annual review thereafter. Earlier, Yannaghas said in a statement that the deal was a "significant" commercial leap for the firm. "We have already sold small quantities of product to the buyer and know it well."

Stockbroker Shard said investors have had to bide their time but their patience appears to have been rewarded with today's announcement Broker Damon Heath said: "While the buyer has not been revealed, this is the news that many shareholders have been waiting for. Of course operational risks remain, not least maintaining a suitable production grade but we look forward to a warm reaction from the market to today’s news." Shares lifted over 80% to 8.125p on the announcement but have fallen back around 30% over the last month.