Battery Minerals (ASX: BAT) has locked in 40% of its planned graphite production from Montepuez in Mozambique after hooking a binding offtake agreement with China-based Qingdao Guangxing Electronic Material.
The agreement with Qingdao Guangxing accounts for 10,000 tonnes per annum of graphite concentrate from Montepuez and covers a minimum three-year period.
This is the company’s second offtake agreement in just under a month, with the first inked a month ago with US-based Urbix Resources, which will purchase up to 11,000tpa of graphite concentrate.
“We have tailored the Montepuez project so that it is extremely bankable, it generates a product which meets the needs of battery manufacturers, delivers extensive benefits to the local community and creates strong returns for shareholders,” Battery executive chairman David Flanagan said.
“With two binding offtake agreements now signed, we are more confident than ever that we achieve all these objects,” Mr Flanagan added.
Battery topped up its cash in November last year with a A$20 million capital raising, which will fund early development and planning at Montepuez, which kicked-off in early December.
Engineers have been appointed to start designing the Montepuez process plant, with a 1.3mtpa crusher ordered and due on site during March.
Montepuez has a probable ore reserve of 41.4 million tonnes grading 8.8% total graphitic carbon and an indicated and inferred resource of 105.9mt grading 7.74% total graphitic carbon
Under stage one production, Battery is aims to produce 50,000tpa of graphite concentrate with a 96.7% total graphitic carbon purity.
In Battery’s value engineering study, operating cash flow of US$20 million per annum is anticipated for the first 10 years of operation, with the project’s payback period set at two years.
Final regulatory approvals for Montepuez are anticipated by the end of the current quarter, with construction planned to begin in April and first shipments of graphite concentrate due during the March quarter next year.
Shares in Battery soared 5.88% in early morning trade to A$0.072.