Emerging mineral sands miner Sheffield Resources’ (ASX: SFX) shares leapt 9% in early afternoon trade after the company announced it had secured another offtake agreement for its Thunderbird mineral sands project in Western Australia.
According to Sheffield Resources, the Thunderbird mineral sands project is one of the largest and highest-grade mineral sands projects discovered in decades.
The agreement was inked with India-based Sukaso Ceracolors Ceramics (Sukaso), which will purchase a minimum 12,000 tonnes of zircon annually.
Sukaso is India’s largest ceramic raw materials supplier and this contract accounts for 24% of Thunderbird’s estimated initial zircon production.
With this latest arrangement, Sheffield Resources has now secured offtake agreements covering 36% of its planned Stage 1 production at Thunderbird.
Sheffield Resources managing director Bruce McFadzean said the agreement was for an initial five-year period, with pricing to be based on the prevailing $US value at the time and renegotiated quarterly.
“We welcome the relationship with Sukaso and this agreement continues to demonstrate the high-quality zircon product to be generated from the Thunderbird project over the 42-year life of mine,” McFadzean added.
“With more than one third of our premium zircon for Stage 1 if Thunderbird now under binding agreement, over the coming months, we will continue to deliver on our offtake and funding objectives which we commenced in 2017.”
Demand for mineral sands including zircon has historically been linked to GDP. In the last five years, the mineral sands market has experienced a hiding, causing several mines to be shut down and plans for more mines to languish.
With few projects coming on line, supply deficiencies are forecast, which bodes will for the long-term outlook on zircon.
Mineral sands comprise zircon and titanium minerals (rutile, ilmenite, leucoxene and synthetic rutile) and can be found in a multitude of every day products including paint, plastics, tiles, sanitary ware, sunscreen, metal, deodorant, toothpaste, medicine, food and renewable energy.