The term sheet is expected to result in Lindi Jumbo graphite concentrate being supplied to Chinese graphite products manufacturer Qingdao Risingdawn Graphite Technology Co (QRGT).
Shares jumped almost 9% in early trade to a new 12-month high of 19.5 cents.
Walkabout Resources executive chairman Trevor Benson said: “Since engaging with a number of potential offtake partners we are seeing an increased level of confidence in our product and a growing interest in our ability to deliver a stable supply of quality, large flake graphite.
“This is evidenced in the recent signing of binding offtake term sheets.
“This binding offtake term sheet with Qingdao Risingdawn together with the recently announced Inner Mongolia Qianxin Graphite term sheet substantially reduces the demand side risk of the project and is very important for our ongoing funding discussions.”
Key terms of binding agreement
The binding terms of the agreement signed with QRGT are to deliver 10,000 tonnes of flake graphite concentrate into China for three years following the beginning of production.
A final offtake agreement will replace the term sheet and this is due to be finalised during the second half of 2019.
The two agreements now secure the sale of up to 75% of the planned production of high-purity large flake graphite concentrate for the first three years following the start of operations.
The planned 40,000 tonnes per annum Lindi Jumbo Graphite Project now has binding offtake terms and non-binding agreements in place for between 50,000 and 60,000 tonnes per annum of graphite products.
Current status of binding and non-binding offtake agreements for the Lindi Jumbo project.
QRGT is constructing an additional expandable graphite plant within its upgrading facilities and is securing suitable graphite feedstock for this production unit.
The company will also use Lindi Jumbo Graphite in the manufacture of graphite pipes, which employ licensed processing technologies.
A suitable pricing mechanism will be finalised during the final agreement negotiations planned for later this year.
The company continues to progress a structured marketing strategy and build key relationships in target markets where there is increasing demand for Lindi Jumbo graphite products.
Discussions and negotiations with potential market and offtake partners remain ongoing.