Auxico Resources Canada Inc (CSE:AUAG, OTC:AUXIF) announced the signing of an offtake agreement with Cuex Metal AG, the Swiss subsidiary of the Chinese bulk commodity trading company Shangai Qunxian Industrial Company, for the purchase of commercial tin concentrates (cassiterite) from its Massangana Tin Tailings project in the state of Rondônia, in Brazil.
The Montreal-based company said the agreement represents a purchase of 3,600 tonnes of tin concentrate per year, over a five-year period, for a total of 18,000 tonnes of commercial tin concentrates.
At current London Metal Exchange prices, the material is valued at US$330 million, noted the company.
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Auxico said it plans to build a 2,500- tonne per day processing facility in Rondônia that will produce on a yearly basis 6,000 tonnes of cassiterite, 90,000 tonnes of ilmenite, 13,500 tonnes of columbite, 90,000 tonnes of zirconium and 37,500 tonnes of monazite.
A recent economic forecast commissioned by the company and prepared by the Brazilian independent company PrimeStar has projected yearly revenue of US$300 million, and annual earnings before interest, taxes, depreciation, and amortization (EBITDA) of US$198 million.
Auxico emphasized that it is negotiating additional offtake agreements for cassiterite, columbite, zirconium and rare earths. It plans to kick off commercial production in the second quarter of 2023.
The Massangana tailings are estimated to contain 30,000,000 tonnes, according to a non-compliant NI 43-101, and feature in a study prepared by the German Mineral Resources Agency and Geological Survey of Brazil.
"We are extremely pleased to announce the signing of the agreement with Cuex, another important milestone in the development of the Massangana Tin Tailings project," Auxico CEO Pierre Gauthier said in a statement.
"With a scalable and sustainable project such as Massangana, along with the company's valued partnerships, we aim to become a consistent long-term provider of tin, titanium, rare earths and other critical minerals to global markets,” he added.
Gauthier noted that his company continues to “explore other strategic partnerships.”
Auxico previously signed a joint venture (JV) agreement with Cooperativa Estanifera de Mineradores da Amazônia Legal Ltda (CEMAL) to produce a range of concentrates from the Massangana tailings.
Founded in 2014, Auxico is focused on the acquisition, exploration and development of mineral properties in Colombia, Brazil, Mexico, Bolivia and the Democratic Republic of the Congo.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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