Sovereign Metals Limited (ASX:SVM, AIM:SVML) has entered a non-binding Memorandum of Understanding (MoU) with Hascor International Group for the potential supply of 25,000 tonnes of natural rutile per annum from its Kasiya Rutile Project in Malawi to Hascor’s processing plants and clients across the world.
The MoU contemplates a supply agreement to cover an initial five-year period from the commencement of nameplate production.
Notably, the premium chemical parameters of Kasiya’s natural rutile produced indicates the product is suitable for all major end-use markets including welding, titanium dioxide pigment feedstock and titanium metal.
Moving forward, Kasiya continues to attract significant offtake interest as the largest undeveloped natural rutile project in the world and the first major rutile discovery in more than half a century.
“Premium rutile products”
Sovereign managing director Dr Julian Stephens said: “We are very excited to have signed this MoU with a major rutile supplier like Hascor about a future offtake agreement and to provide input on marketing for our premium rutile products from Kasiya.
“Hascor is a market leader in natural rutile product development and distribution for the welding industry across five continents.
“The offtake MoU with Hascor points to the quality and strategic nature of our world-class Kasiya Rutile Project.”
Maiden MoU
This maiden MoU is part of Sovereign’s product marketing strategy as the demand and pricing for natural rutile are both very strong as the global structural deficit in supply continues to widen.
Consequently, Hascor will provide Sovereign with strategic advice on marketing and product development.
The MoU is non-exclusive and non-binding and remains subject to negotiation and execution of a definitive agreement to give effect to the MoU.
It will expire on December 31, 2023, but can be extended by agreement by both parties should a definitive agreement not have been reached by that time.
Watch: Sovereign Metals signs first offtake agreement for rutile from the Kasiya Rutile Project in Malawi
About Hascor
Hascor International Group is a key producer of nitrogen-bearing ferroalloys, metal powders and specialty minerals.
The company brings several decades of experience as a processor and global distributor of natural rutile products including rutile flour, calcined rutile and rutile sand for the welding industry.
Demand from welding industry
Natural rutile is classified as a high-grade titanium feedstock, with high-grade titanium feedstock market consuming about 2.8 million tonnes of contained titanium dioxide with strong demand driven from the welding, pigment and metal sectors.
Major natural rutile producers have noted over recent years that very strong demand from the welding market is outstripping supply.
Interestingly, bagged rutile sales into the welding and other non-pigment sectors achieve significantly better pricing, often with significant premiums to bulk rutile pricing.