Offtake Agreement for High Grade Nickel Sulphide Product

22-Jul-2019 Intellasia | | 5:25 PM Print This Post

Western Areas Ltd (“Western Areas” or the “Company”) is pleased to announce an offtake sale and purchase agreement (“Contract”) has been executed with Sumitomo Metal Mining Co., Ltd. (SMM), a major Japanese mining and refining conglomerate, for delivery of premium high-grade nickel sulphide precipitate (NSP) being produced at the Company’s Mill Recovery Enhancement Project (MREP) located at the Forrestania Nickel Operation.

The NSP product is a new high-grade product stream (grading 45% – 50% nickel), separate from the Company’s conventional nickel sulphide product (which grades ~14% nickel) supplied under existing offtake contracts with Tsingshan and BHP Billiton Nickel West. The Company has been supplying SMM with the product on a spot sale basis for many months.

The Contract generally contains market standard term and conditions, with key terms of the agreement including:

* Approximate 12 month term, expiring 30 June 2020;

* No set volume to be supplied, however while not an exclusive supply agreement it is expected that all product produced will be sold into the agreement;

* Delivery on a CIF basis, into the port of Osaka; and

* Increased payable rates compared to the Company’s conventional run of mine floatation concentrate, given the high grade NSP nickel product being suitable for direct feed into the refining process.

Western Areas Managing Director, Dan Lougher, said the Company is pleased to announce a longer-term agreement for offtake from the MREP, following completion of multiple spot sales to various parties.

“The execution of the agreement with SMM validates the market demand for this premium NSP product, while providing the contractual framework to streamline deliveries and remove the need for monthly negotiations on terms prior to each shipment.

“Formalising a relationship with a high quality international resource company with downstream processing capabilities and direct links into the electric vehicle battery market is a significant step forward in our strategy to supply diversified nickel products into the rapidly evolving nickel market,” Mr Lougher said.

To view the full ASX Announcement please click here.

 

(Source: FTI Consulting, Strategic Communications Perth)

 


Category: FinanceAsia

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