Walkabout Resources (ASX:WKT) has concluded a series of agreements that can allow it sell up to 75% of its annual production from the Lindi Jumbo Flake Graphite Mine in Tanzania.
A total of 30,000 tonnes per annum of the initial production target of 40,000 tonnes per annum is now under agreements with European and Chinese traders and end-users.
Negotiations for sales of the remaining 10,000 tonnes per annum of production are continuing.
Trevor Benson, chairman, commented: “These agreements are a significant step forward in providing evidence as to the demand for the Lindi Jumbo Project premium high grade and large flake graphite products and are key to finalising the current funding proposal for the development of our project.
“Having just returned from China, where company executives finalised these agreements I am confident that all the quality product from our project at Lindi will be produced and contracted for sale.”
Off-take details
The agreements include:
- Heads of agreement (HOA) for the sale of 7,500 tonnes per annum to a large Chinese graphite and expandable products mining and processing company, Jixi Puxiang New Material Co. Ltd. under an HOA leading to a binding agreement;
- HOA for the sale of 10,000 tonnes per annum of premium concentrate products to a Chinese-European Trading House (CTH), who prefers to not have their identity disclosed at this time and with a particular focus on the expandable graphite markets; and
- Memorandum of understanding with a strategic alliance for the sale of 12,500 tonnes per annum to Georg H. Luh GmbH, a German based, specialist graphite trading house with access to European expandable graphite markets.
The agreements make provision for the negotiation of binding sales and purchase agreements, including certain exclusivity arrangements, to be finalised before the end of 2017 and for deliveries to commence during 2018.
All agreements call for firm sales terms with pricing mechanisms and specifications to be finalised by the end of 2017.
Targeting the expandable market
Walkabout’s stated intention for the target market of Lindi Jumbo graphite is the expandable graphite market.
This market is expected to grow significantly as the global economy emerges from low growth rates and as the electric battery storage market sees increased demand.
For this reason, the company has sought first to align itself with existing operators in the expandable graphite market and form strategic, long-term marketing alliances.
These commercial relationships will leverage existing market networks and contribute to improved product development and expansion opportunities.
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.
Project details
Lindi has a Mineral Resource of 3.24 million tonnes graphite grading 10.9% TGC and Ore Reserve of 809,081 tonnes graphite grading 16.13% TGC.
Lindi’s definitive feasibility study (DFS) 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.