Kibaran Resources secures binding off-take deal with European Graphite Trader
Kibaran Resources (ASX: KNL) has achieved a major milestone in signing a binding offtake
agreement with a sophisticated European graphite trader (EGT), which
significantly de-risks the development of the company's Tanzanian
Kibaran is the first ASX listed company to sign a binding off-take agreement for graphite sales.
The off-take agreement to purchase 10,000 tonnes of flake graphite concentrate per year, over a 5 plus 5 year period, provides an independent endorsement of the quality and commercial appeal of graphite at the Epanko deposit.
The pricing of graphite sales is related to flake size, with key attributes of Epanko graphite its distribution and quality, including large and very large flake sizes.
Kibaran wholly-owns the Epanko deposit which currently has an Inferred JORC Resource of 14.9 million tonnes at 10.5% TGC, for 1.56 million tonnes of contained graphite. The deposit is located within the Mahenge Graphite Project.
Highlighting the potential to expand the resource, the initial estimate only covers 20% of the project area. Metallurgy has found Epanko graphite to be large flake and expandable in nature.
Under the terms of the binding off-take agreement, the EGT guarantees the purchase of 10,000 tonnes of graphite concentrate per year from Kibaran, for an initial period of five years with the option to renew for a further five years, on a market based pricing mechanism. This is a contractual provision and not a production target.
Andrew Spinks, executive director, commented: “Kibaran is the first ASX-listed company to sign a binding graphite off-take agreement, and the first company globally to sign a graphite off-take that provides a solid entry position into the sophisticated European market."
Importantly, the off-take deal is a strong endorsement of the quality and commercial appeal of the large flake graphite identified at Epanko.
Spinks added, “Furthermore, the potential 10-year length of the contract underpins the strong long-term outlook for graphite demand, particularly for large flakes that are extremely sought after for value-add, high-technology carbon products.”
The importance of graphite size in the sales process
The pricing of graphite sales is related to flake size. Key attributes of Epanko graphite are its distribution and quality, including large and very large flake sizes.
This includes large and very large flake sizes – favourable distribution with 73.8% in the +106 micron fraction and 21.6% in the +300 micron fraction, which is the high value graphite.
The project's graphite also has a very low percentage of fines, which is the low value graphite (26.2% in the -106 micron).
There is ‘expansion’ capacity – as the graphite is considered suitable for the 'expanded' graphite market.
Flake graphite shortage looms
Flake graphite output is set to endure a significant cut next year after one of China's biggest flake graphite producing regions was ordered by the local government to halt production activities on environmental grounds.
This means 20% of the country's supply will be put on hold, equating to 10% of global supply, or 60,000 tonnes per year.
Pindgu is China’s oldest flake graphite producing region and has a capacity of 100,000 tonnes.
It is only second to Heilongjiang province in China in terms of production power which has a capacity of 280,000 tonnes and produced 120,000 to 140,000 tonnes in 2013.
The closures are expected to last until at least June of next year
European graphite trader acquiring shares
Adding to a further vote of confidence in Kibaran's Epanko deposit, the agreement with the European graphite trader also entitles it to acquire 5 million Kibaran shares at $0.10, a 25% premium to the closing price on Friday.
The EGT will also have the right to participate in any future capital raisings by Kibaran to maintain its equity level in the company.
The agreement provides Kibaran with a significant partner in the graphite industry to jointly market and sell graphite with the security of an overriding off-take guarantee from the EGT.
It provides Kibaran with a significant advantage in gaining a foothold in the tightly controlled graphite market.
Tanzania has a stable and supportive Government – committed to mining industry growth and development.
Kibaran could also benefit from significant cuts to flake graphite output in China, after one of the country's biggest flake graphite producing regions was ordered by the local government to halt production activities on environmental grounds.
Near-term catalysts for Kibaran include progressing additional strategic, long-term partnerships that will help the company to potentially become a major producer of graphite in Tanzania.
- Bauxite Resources公司收到大量持股通知
- ASF Group的联营公司将Dawson West热煤项目的资源储量提升至6.45亿公吨
- White Cliff Minerals公司于Aucu项目发现新的矿化带
- Bauxite Resources公司非执行董事卸任
- South Boulder Mines公司董事长购买市售股份
- Carbon Energy公司筹资500万澳元以推进天然气项目
- South Boulder Mines公司降低Colluli钾肥项目的运营开支和资本开支