Suvo Strategic Minerals Ltd has secured a five-year extension to its existing offtake agreement with Chaozhou Chengcheng Industrial Co., Ltd, ensuring continued supply of hydrous kaolin from its Pittong operation until February 2030. The agreement, valued at approximately A$6.56 million, stipulates a minimum order quantity of 8,750 tonnes under a take-or-pay arrangement.
The deal comes only weeks after the company extended a major sales contract with Norske Skog for a further three years, to supply Suvo’s hydrous kaolin product from the Pittong operations in Victoria.
Read more: Suvo Strategic Minerals extends kaolin sales contract with major buyer
Significant increase in time and order volumes
The latest extension with Chaozhou, represents a significant increase from the previous three-year contract, which covered 4,275 tonnes: the extended agreement incorporates a 25% annual increase in minimum order volumes.
The new terms will take effect from February 2025, maintaining the same conditions as the previous contract.
“We are pleased to extend this take or pay Offtake Agreement with our valued customer, Chengcheng. As a result of winning new business, following an aggressive marketing campaign throughout China, with our local distribution partner, Chengcheng, we were able to increase the annual minimum order quantities in the Agreement by 25%,” executive chairman Aaron Banks said.
“The increase in demand from one of our major customers just last month and now another positive step forward with this Agreement, we anticipate significant growth in sales volumes in 2025. Furthermore, we anticipate further positive growth at the Pittong operations, which reported positive EBITDA and net profit, at project level, of A$0.51 million and A$0.39 million last quarter.
“We continue working on other product development opportunities as we look to grow the sales of kaolin from our Pittong operations and generate positive cashflows.”