Conquest Mining (ASX: CQT) has been in discussions with potential off take partners from China for future production from the Mt Carlton gold project in North Queensland, receiving letters of intent from two smelter companies to separately secure 100% of the concentrate expected to be produced from the Mt Carlton project.
Conquest has shortlisted six potential parties following the provision of detailed new concentrate specifications to 14 interested parties, all of which are Chinese based smelter companies.
Two Chinese precious metal smelters companies, who are part of the short-listed group, have already undertaken due diligence visits to Australia.
The company has received letters from each of those two companies formally expressing an interest in separately securing 100% of the concentrate expected to be produced. Conquest is aiming to finalise long-term offtake contract within three to four months.
The expressions of interest are non-binding and any formal offtake agreement will be subject to further mutual due diligence investigations and agreement on commercial terms.
Jake Klein, executive chairman, said "the communications and expressions of interest that we have received from the first smelter companies to commence their due diligence visits provide us with further confidence that we will be able to secure a reliable, long-term offtake contract for all of the concentrate to be produced at Mt Carlton."
“We are particularly encouraged by the quality of the parties that we are in discussion with and will be working to formalise a long-term offtake contract in the next three to four months."
Discussions are ongoing with all six shortlisted offtake parties regarding the purchase of concentrate and the provision of development funding for the Mt Carlton project. Concentrate samples will be dispatched to all shortlisted parties in early August.
Project scale at Mt Carlton is expected to be in the order of 800,000tpa throughput to produce approximately 105,000 ounces per annum gold equivalent1 in concentrate from the V2 open pit.
Concentrate production from the V2 open pit is expected to be approximately 4,500 tonnes per month with an average grade in the range of 40-45g/t Au, 350-450g/t Ag, 5-6% Cu and 1.6-2.2 % As.
Conquest said each of the short-listed parties has experience in treating concentrate similar to the Mt Carlton concentrate and all have confirmed that they have capacity to treat the concentrate.
All of the short-listed parties are China based smelter companies. Conquest's Chinese focus is being driven by the extensive network and previous experience of the current management team in China.
Charles Wang, Conquest Mining's Commercial Manager was previously Deputy General Manager at the Sino Gold Mining Limited “Biogold” plant in Shandong Province in China, a plant that purchased and processed concentrates, similar to Mt Carlton concentrates, from both domestic and international customers.
Given this intimate knowledge of the Chinese market, Conquest is confident that it will be able to sell its concentrates into China at better terms than would be available through traders or smelters elsewhere in the world.
The company has a 100% interest in the Mt Carlton gold-silver-copper project, near Townsville, that is being advanced towards development. Optimisation studies and a review of the proposed process flowsheet are underway and a development decision is expected in the December quarter of 2010.