PERTH (miningweekly.com) – ASX-listed Mayur Resources has inked a binding offtake agreement for magnetite product from its Orokolo Bay iron and industrial sands project, in Papua New Guinea.
The offtake agreement covers 300 000 t/y of magnetite product over a three-year period, with an option to extend another year, at market-linked pricing.
The offtake agreement replaces a previously announced offtake with Shinebest, announced in 2019, and sees an increase in the contracted volume and term.
The agreement was subject to the Orokolo Bay project entering operations by the end of June next year, and a subsequent trial shipment of 30 000 t performing to the satisfaction of Shinebest.
Mayur MD Paul Mulder said on Wednesday that the company was pleased to have revised the agreement with Shinebest for 60% of the planned production from the fully permitted and construction-ready Orokolo Bay iron and industrial sands project.
“Combined with the term sheet we executed with a leading Japanese trading house in December last year, the significant majority of the expected magnetite production from Orokolo Bay is now under some form of offtake agreement. The execution of this agreement with Shinebest provides investors, financiers and other stakeholders future revenue certainty in continuing to progress the project’s construction plans, with funding partners in the private and public space.”
A 2020 definitive feasibility study estimated that Orokolo Bay would require a capital investment of $20.5-million and could generate revenues of $969-million over a mine life of 15 years, producing 400 000 t/y of vanadium titano-magnetite, 100 000 t/y of magnetite for dense media separation, 8 000 t/y of zircon concentrate and 1-million tonnes a year of silica construction sand.
The study estimated that based on the 5-million-tonne-a-year throughput rate, the Orokolo Bay project would have a post-tax net present value of $131-million and an internal rate of return of 103.7%, with life-of-project earnings before interest, taxes, depreciation and amortization of $380-million.