Suvo Strategic Minerals has struck a major take-or-pay offtake agreement with China’s Chaozhou Chengcheng Industrial.
The agreement covers a minimum order of 4275 tonnes of hydrous kaolin over a three-year period, with the contract valued at between $3.25-$3.50 million.
The offtake agreement builds on Suvo’s growth strategy and current upgrade of its Pittong plant in Victoria, which is tracking on schedule and on budget, with certain key equipment already installed, commissioned, and working as intended.
The hydrous kaolin supplied will be primarily used in the inks and pharmaceutical sectors, and attracts a price premium.
Executive chairman Henk Ludik said the security provided via the offtake terms would provide a significant boost to the company’s cashflow and increase the weighted average value of products sold from Pittong.
“Importantly it paves the way for one of the main strategic focuses of the company at present, which is to continue to diversify its product basket, with a focus on premium end markets such as the inks, cosmeceutical and pharmaceutical sectors,” he said.
Suvo also announced it had executed a second legally binding supply contract with C&D, the minerals division of Xiamen C&D — a Global Fortune 500 (Top 100) company with annual revenue of about $US100 billion.
The contract is for delivery of an additional 80 tonnes of Pittong hydrous kaolin product to be further used in the next round of commercial-scale trials.
“We are pleased to provide confirmation that the upgrade and optimisation of the Pittong operations is on budget and on schedule for commissioning in CY23,” Ludik said.
“The commissioning date is aligned to the ongoing increase in off-takes for our premium hydrous kaolin product set. Both the new contract with Chaozhou and the expanded trial contract with C&D supports Suvo’s commitment to sell new volumes from the upgraded operations into the premium market.“
Suvo also owns kaolin and high purity silica assets at Gabbin (kaolin), Eneabba and Muchea (silica sands) projects in Western Australia.