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Volt Resources signs graphite offtake term sheet

Management's recent trip to China continues to yield results.
Volt Resources signs graphite offtake term sheet
Volt owns the largest JORC graphite resource in Tanzania

Volt Resources (ASX:VRC) has signed a detailed offtake term sheet with Guangxing Electrical Materials (GEM) for 5,000 tonnes per annum of flake graphite concentrate.

The flake graphite concentrate will come from Volt’s planned Stage 1 production at its flagship Namangale graphite project in Tanzania.

Both parties are committed to completing a binding offtake agreement by 30 September 2017.

This is the third agreement that Volt has signed with a China-based group since mid-May, highlighting the success of management’s recent visit to meet prospective graphite customers.

Trevor Matthews, CEO, commented: “The benefits from our recent visit to China continue to flow through with GEM agreeing to take 5,000 tonnes of flake graphite concentrate from mid-2018.”


Agreement details

The detailed offtake term sheet signed between GEM and Volt has the following key terms:

- Both parties agree to complete a binding offtake agreement by 30 September 2017;
- The initial contract term is five years with an option to extend by mutual agreement for a further five years;
- Annual quantity is for 5,000 tonnes of flake graphite concentrate from Stage 1 production commencing from mid-2018;
- Pricing will be set six-monthly based on prevailing rates for expandable and spherical products, flake size distribution and grade; and
- Payment terms, packaging and shipping arrangements included.


Namangale graphite project

Volt has completed a pre feasibly study which projected robust technical and financial viability of the Namangale project.

The project has an estimated a pre-tax net present value (NPV) of US$1.31 billion based on a 22-year mine life, with an 87% internal rate of return and pay-back period of only 1.4 years.

Volt has the largest JORC graphite resource in Tanzania with 461 million tonnes grading 4.9% total graphitic content.

The project has outstanding large flake size distribution and is ideally located near to critical infrastructure.

Sealed roads run through the project area with ready access to the deep-water port of Mtwara located 140 kilometres away.


Analysis

Based on all current and prospective customer agreements, Volt can potentially secure minimum commitments for 26,000 tonnes per annum of flake graphite concentrate by Q4 2017.

This would adequately cover Stage 1 production, which is now targeted at 20,000 tonnes per annum of graphite concentrate and potential downstream products for the battery anode market.

These agreements will also provide considerable comfort to financial institutions currently reviewing the provision of development funding for the Namangale project.

Furthermore, these agreements provide Volt with a strong framework to transition into a producer by mid-2018.

The company board is confident that development funding for Stage 1 of the Namangale project will be secured in the coming months.

 





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