Sheffield Resources Limited (ASX: SFX) has signed a maiden binding offtake agreement for the future sale of zircon concentrate to China from its Thunderbird Mineral Sands Project in Western Australia.
The agreement was signed with the largest mineral sands processor in China, Hainan Wensheng High-Tech Materials Company Limited and is based on a minimum annual supply of 27,000 tonnes of zircon concentrate.
This represents approximately 54% of the estimated total volume of zircon concentrate to be produced from Stage 1 of Thunderbird.
Sheffield’s Managing Director, Bruce McFadzean, said the signing of a cornerstone Chinese customer represents another significant step towards the development of Thunderbird, one of the largest and highest-grade discoveries of mineral sands in recent decades.
Initial earthworks and site access arrangements are currently underway at the Project, ahead of targeted commencement of construction in Q2 2018.
We are delighted by the new and important relationship we have established between Sheffield and Wensheng, the largest integrated mineral sands processor in China,” Mr McFadzean said.
“Wensheng has a depth of experience and comprehensive sales network, representing a quality brand within the mineral sands industry.
“We continue to see strong demand for the range of high-quality zircon and ilmenite products that will be produced at Thunderbird. As we pursue our offtake strategy, we expect this demand to translate into additional agreements in coming months, continuing the success we have experienced in 2017.”
“With 44% of premium zircon for Stage 1 of Thunderbird already under binding offtake agreement, the addition of over half our Stage 1 zircon concentrate to our portfolio of binding agreements further supports the product quality of the Project. We look forward to providing Sheffield’s offtake partners, the community and our shareholders with further offtake and financing updates in the near future.”
Key terms of the Agreement include:
- Wensheng to purchase a minimum contract volume of 27,000 tonnes of Thunderbird zircon concentrate annually for an initial five-year period, with annual contract extensions thereafter;
- Opportunity to supply a further contract volume, subject to production increasing above 50,000 tonnes per annum;
- Take or pay provisions apply to the minimum contracted volume under the Agreement;
- Thunderbird zircon concentrate pricing is based on the underlying US$ price for premium zircon and determined using the ZrO2, TiO2 and TREO content of the concentrate delivered.