Barely 24 hours since announcing a successful capital raising of A$4.2 million via an entitlement offer, Triton Minerals (ASX: TON) has boosted shareholder sentiment by unveiling another binding offtake agreement. The deal is the second in as many months for the soon-to-be graphite producer.
On this occasion, Triton has agreed to supply graphite concentrate to Qingdao Chenyang Graphite from its flagship Ancuabe graphite project in northern Mozambique.
The binding offtake agreement with Chenyang covers up to 16,000 tonnes a year of Ancuabe graphite concentrate for at least five years, with a seller option for a further five years. The minimum quantity under the agreement is 10,000t per annum, “across a range of graphite specifications”.
Potentially one of the most commercially-astute details is that Triton has agreed to supply its graphite at floating prices determined by prevailing market prices, rather than being fixed at an arbitrary level at the time of signing the deal.
This is likely to mean that Triton will automatically obtain higher sales prices if the projected market demand for high-grade graphite continues to rise, as forecast by market analysts.
Detailing the deal
For the deal to go ahead there are several conditions that Triton must still meet.
Triton’s offtake agreement is conditional upon the company making an investment decision at Ancuabe, obtaining all necessary approvals, obtaining a mining concession and completing construction of a mine including various infrastructure — milestones which must still be completed with Triton forecasting a date sometime “in the second half of 2019”.
Assuming there are no hiccups between now and then, the offtake deal means that Triton has now secured binding agreements to offload approximately 50% of its total capacity from Ancuabe which serves as another encouraging sign that the project will be economically viable as previously predicted in feasibility studies.
Furthermore, Triton said that it “continues to receive strong expressions of interest for offtake and is continuing to progress negotiations with other offtake parties.”
“Securing binding agreements for up to 50% of forecast annual production with experienced graphite producers in Chenyang and Tianshengda demonstrates the success of Triton’s product marketing strategy and the demand for large flake, high purity graphite in the Chinese market,” said Mr Peter Canterbury, managing director of Triton Minerals.
“In addition, this external support for the Ancuabe graphite project provides strong momentum for our EPC, financing and development objectives, which are on-track to enable an investment decision in 2018 and first production from Ancuabe in late 2019,” said Mr Caneterbury.
With offtake deals now stacking up, Triton’s immediate focus is likely to be technical and commercial evaluation of engineering and construction tenders which will play a huge role in delivering Triton’s graphite to its growing list of Chinese customers.
According to Triton, it will meet with various contractors later this month and anticipates to award engineering and construction contracts in June 2018.