Peninsula Mines Ltd’s (ASX:PSM) negotiation of a binding supply letter of agreement with Canadian-listed DNI Metals Inc. (CNSX:DNI) should assist the company in meeting its goal of establishing a vertically integrated graphite group.
Peninsula and its wholly-owned subsidiary Korea Graphite could now progress to finalising binding offtake agreements with Korean end-users.
A commitment by DNI to supply up to 24,000 tonnes per year of flake graphite to Peninsula and its subsidiary may also be beneficial in developing supply from both offshore and Korean projects.
Ratification of the agreement is subject to Korea Graphite finalising offtake agreements with Korean end users.
Parties look to fast track DNI’s Madagascar flake graphite projects
As Peninsula flagged in 2017, it will work in conjunction with Korea Graphite and DNI in assessing potential collaborative development opportunities.
This could include a fast tracking of DNI’s flake-graphite projects located in Madagascar.
Madagascar has been producing high-purity, large-flake graphite for over 100 years and with DNI’s large flake graphite deposits close to port, there is the potential to minimise costs.
Peninsula and Korea Graphite continue to discuss collaborative development opportunities
The binding supply agreement is seen as a precursor to the establishment of possible offtake agreements with Korean flake graphite end-users, potentially marking the start of Peninsula’s Korean graphite business.
In management’s view, such a development would assist the company in establishing a graphite development and production business in Korea.
This line of thinking is supported by the relationships that Peninsula has forged with end users that are involved in the production of lithium-ion anodes and other new technologies.