Suvo Strategic Minerals Ltd (ASX:SUV) has signed a non-binding cooperation agreement with Xiamen C&D Inc subsidiary C&D Logistics Group to negotiate deals for the supply of kaolin.
The companies will start the negotiations once test results have confirmed the suitability of kaolin material for use in C&D’s processes and products.
Following evaluation, Suvo and C&D will work together to develop and grow specific kaolin product markets, to develop long-term relationships with downstream customers in a range of industries, products and locations.
Under the agreement, Suvo and C&D will seek to negotiate an offtake agreement, with a target minimum offtake of 80,000 tonnes per annum of hydrous calcined kaolin.
Looking ahead, this agreement helps underpin processing capacity expansion works underway at SUV's Pittong operation in Victoria and future development of its WA-based Gabbin project.
“Significant milestone”
Suvo non-executive chairman Henk Ludik said: “This cooperation agreement with C&D marks a significant milestone in supporting Suvo’s strategic growth plan.
“The agreement helps underpin the expansion works currently taking place at our Pittong operation, with the potential to lead to a minimum offtake of 80,000 tonnes per annum of hydrous calcined kaolin.
“The investment we are making in our Pittong expansion reflects the surging demand being seen globally for high-quality kaolin products.
“The agreement also comes after the recent successful bulk sample production of High Reactivity Metakaolin from our Gabbin deposit, which allows us to carry out meaningful discussions with potential global partners, such as C&D.
“In addition to enhancing production, Suvo also remains focused on achieving better ESG outcomes, which will be realised through more energy-efficient operations, rehabilitation practices and producing metakaolin products to help decarbonise the cement and concrete industries.”
Agreement summary
The agreement is conditional on sample trials matching technical datasheets supplied from products extracted from the company’s Pittong mine
Products delivered under any offtake agreement could be produced from the company’s existing Pittong operation and/or other kaolin projects.
Under the agreement, C&D has also requested Suvo to provide 12 additional product samples of hydrous clay from its Pittong operations for further evaluation.
Pending the outcome of this evaluation, Suvo and C&D could negotiate further offtake agreements for other kaolin related products that meet the buyer’s specifications. Suvo and C&D will continue to negotiate in good faith to enter into any further contracts.
What is next?
C&D Logistics Group Co Ltd is the minerals division of Xiamen C&D – a Global Fortune 500 company with annual revenue of circa US$100 billion and almost 30,000 employees
This agreement marks another milestone in the company’s ongoing work to scale up the Pittong operations, where an expansion project is underway to more than double its current annual plant capacity to ~60,000 tonnes through the installation of new press decks and automated equipment.
Also, Suvo is progressing work at its Gabbin deposit, 215 kilometres northeast of Perth, Western Australia, where the company recently produced a bulk sample of High Reactivity Metakaolin.