Walkabout Resources (ASX:WKT) has concluded a non-binding strategic sales and purchase memorandum of understanding (MoU) with a European based strategic graphite trading house.
The German based trading house, Georg H. Luh GhmB, will now commence commercial discussions on the sale and purchase of 10,000 to 12,500 tonnes of graphite per year.
The graphite will range across four series of purity and flake-size ranges and commence in 2018.
The parties will also work together in other areas of product marketing and development, specifically in the area of high value graphite products.
Allan Mulligan, director, commented: “Georg H. Luh GhmB is an established graphite industry player in Europe with an impressive track record of operating in the premium end of the graphite market.
“We are delighted to have established initial business relations with the company and look forward to growing the alliance forward.”
Background
Walkabout is fast tracking the development of the Lindi Jumbo Project to take advantage of forecast market conditions for flake graphite deposits with high ratios of large and jumbo flakes.
The company has developed a proprietary processing technique based on an existing and proven flow-sheet used elsewhere in Africa and which yields exceptionally high ratios of large, jumbo and super jumbo flakes into concentrate.
This premium product will allow higher than average revenues to be achieved.
Walkabout currently holds 70% of four licences at Lindi Jumbo with an option to acquire the remaining 30% share.
Recent maiden Ore Reserve
Walkabout recently posted its maiden Ore Reserve for Lindi, which measured 5 million tonnes at 16.13% TGC for 809,081 tonnes of graphite concentrate.
This is the highest grade Ore Reserve in Tanzania totalling 42% of the current Measured and Indicated Mineral Resource.
Furthermore, no Inferred Resources were used in defining the Proven and Probable Ore reserves.
The maiden Ore Reserve follows the recently finalised its definitive feasibility study (DFS), which demonstrated:
- Highest grade mineable resource in Tanzania leading to mill feed grade of >17% TGC;
- Lowest unit operating cost of US$292 per tonne in concentrate at mine gate;
- Lowest start-up capital at US$38.7 million;
- Highest ratio of Large, Jumbo and Super Jumbo (+180µm) flakes in concentrate;
- High weighted average basket price ($1,687) due to flake size distribution; and
- The manageable and realistic start up production rate reduces technical and market risk.
The finalisation of the DFS is a milestone that redirects management focus from project technical design to project development and enabling fund raising.
Analysis
The MoU shows that top tier graphite market participants are taking Walkabout’s Lindi Jumbo Project seriously.
The discussions with the German based trading house support the outlook that a mining operation at Lindi is foreseeable in the near future.
Shares are trading up 14% intra-day, currently priced at $0.07.
The environmental impact assessment (EIA) sign off remains a key short term catalyst for Walkabout.
Following approval of the EIA, the mining licence application can be submitted for approval.