Volt Resources (ASX:VRC) has signed a binding off-take agreement to supply 5,000 tonnes of flake graphite concentrate to U.S.-based Nano Graphene Inc.
Volt’s shares closed up 8% of Friday at $0.042, following an intra-day peak of $0.046.
Earlier this year, the graphite concentrate from Volt’s Namangale project in Tanzania was found to be highly suitable for producing commercial grade, expandable graphite.
The Namangale project is the largest JORC graphite resource in Tanzania with 461 million tonnes grading 4.9% total graphitic carbon.
Volt’s December 2016 pre-feasibility study estimates a pre-tax net present value of US$1.31 billion for Namangale based on a 22-year mine life, with a pay-back period of only 1.4 years.
The new off-take agreement is a significant breakthrough for Volt given the company’s definitive feasibility study has only recently commenced.
The key contract terms comprise:
- Binding off-take agreement for a minimum 5,000 tonnes over five years, with the flexibility to increase sales volume as Nano Graphene’s global footprint expands;
- Flake graphite concentrate grade of 98% total graphitic carbon with no specified flake size;
- Fixed price for the initial 5-year term of the agreement which is at a premium to Volt’s basket price of US$1,684 in the pre-feasibility study; and
- Targeting graphite concentrate delivery to commence in Q1 2018.
Nano Graphene is expected to commence graphene production in the U.S. later this year.
The graphene produced will be sold to Nano Graphene’s U.S. and European clients across a range of sectors comprising lithium-ion batteries and composites, as well as in numerous hi-tech applications.
This new agreement is expected to enable Volt to move to producer status and commence the generation of cash flow from small scale mining and processing in 2018, much earlier than planned.