Pilbara Minerals Ltd (ASX:PLS), owner of the world-class Pilgangoora Lithium and Tantalum Project has entered into a sizeable offtake agreement.
The foundation sales agreement involves the supply of 100,000 pounds of tantalum concentrates over two years to Global Advanced Metals Greenbushes Pty Ltd (GAMG).
GAMG is a wholly-owned subsidiary of Global Advanced Metals, a vertically integrated group that is one of the world’s largest suppliers of tantalum products.
While this is a material agreement, it accounts for circa 15% of Pilbara Minerals forecast annual production of 321,000 pounds from Stage 1 of the project.
Strategically though it is important, as it will provide flexibility for production and sales arrangements while the Pilgangoora plant is being commissioned, ramped up and optimised.
Continued demand and customer engagement for tantalite concentrate
This development also underlines the point of difference between the Pilgangoora project and many other lithium projects in Australia and other locations.
The company’s ability to generate income from the production of tantalite by-product credits enhances project economics and reduces the cost of spodumene concentrate.
The offtake agreement could also be a forerunner to future supply arrangements between the two parties given Global Advanced Metals has ongoing demand for the metal.
Agreement coincides with strong run in tantalum concentrate prices
Pricing will be based on a reference to the market price, and is paid in US dollars per pound.
The agreement is timely given the price of tantalum concentrate has increased from circa US$50 per pound in January 2017 to nearly US$90 per pound in December.