Strandline Resources inks final offtake deal, 100% of production committed
An initial 10-year deal will allow 100% of minerals sands products from the proposed Coburn project to be exported through the Port of Geraldton.
Mineral sands developer Strandline Resources (ASX: STA) has signed an agreement with a Spanish raw material supplier for 10,000 tonnes per annum of premium zircon.
The binding offtake deal with Mario Pilato BLAT is the last offtake agreement, with all output from the planned Coburn minerals sands mine now covered by customer contracts.
The total number of binding sales contracts will deliver US$140 million (A$180 million) a year to Strandline’s bottom line, based on a conversion rate of US$0.70 to the Australian dollar.
Mario Pilato is expected to account for between 8% and 9% of Strandline’s annual revenue from Coburn over the first two years of production.
The Spanish company is described as an “industry leader” in the ceramics industry, supplying raw materials to ceramics, glass and refractory applications.
Offtake contracts with leading mineral sands consumers
Coburn, 240km north of Geraldton, has an initial 22.5 years of ore reserves containing zircon, ilmenite and rutile and is capable of supplying 5% of the world’s zircon needs.
The company says that it now has six offtake contracts with some of the world’s largest mineral sands consumers, with around 80% of Coburn’s output destined to Europe and the US, the balance going to Asia.
Managing director Luke Graham says the binding offtake agreements have de-risked the project and provided certainty in revenue streams along with maximising returns to shareholders.
“The Coburn project is set to capitalise on its robust margins, supportive market tailwinds, its tier one location, its high-calibre contracting partners and the growing demand for critical minerals,” Mr Graham added.
Capital cost fully funded
The company noted that Coburn’s premium zircon quality has been confirmed as being of ceramic-grade specification — containing more than 66% of zirconium dioxide, showing good whiteness properties with low impurities (including low uranium and thorium).
It will be used by Pilato to produce zircon flour or zirconium silicate for downstream ceramics opacifiers (which makes the end product opaque) and in premium refractory applications.
Recently, Strandline inked a 10-year liquefied natural gas supply agreement to power its mine development and operation in Western Australia.
Road trains will move the LNG from the Pluto loading facility — owned by Woodside Energy (ASX: WPL) — near Karratha to the Coburn mine site.
The LNG is being supplied by the Woodside Energy-EDL joint venture.
Coburn’s capital cost of $338 million is fully funded through to production.
First production at Coburn is scheduled for the December quarter in 2022.