PERTH (miningweekly.com) – Junior graphite developer Magnis Resources has inked an offtake agreement with China National Materials Industry Import and Export Corporation (SINOMA) from the Nachu project, in Tanzinia.
Under the terms of the offtake agreement, SINOMA would purchase some 80 000 t/y of graphite, across all size ranges, for a period of five years. The Chinese firm also had the option to extend the agreement.
The purchase price for the graphite would be linked to market prices, and Magnis has estimated that, at current prices, the offtake could be worth some $160-million a year, or over $800-million over the contract life.
Magnis chairperson Frank Poullas said that the offtake agreement was historic for both Magnis and the graphite industry as a whole.
“The signing of a binding offtake agreement and the recently announced Joint Ore Reserves Committee compliant resource, with majority as measured and indicated, are pivotal elements in Magnis’ strategy to fast-track the Nachu graphite project to production,” Poullas said.
He pointed out that the company was also in discussions with other potential offtake partners, as well as financing partners.
The Nachu project was estimated to host a mineral resource of 156-million tonnes, grading 5.2% graphitic carbon, to contain over eight-million tonnes of contained graphite.
Some 66% of this resource is classified as measured and indicated.
In November this year, Magnis raised A$3-million in a share placement to fund a prefeasibility study on the Nachu project, which was due later this month.
Magnis shares spiked by 20% on Wednesday, with the company’s shares trading at a high of 23c a share, up from a low of 20c a share.