Mozambique-focused graphite explorer Triton Minerals (ASX: TON) has inked a five-year offtake agreement to supply China-based Qingdao Tianshengda Graphite with a portion of its anticipated graphite production from its flagship Ancuabe project.
The initial term sheet agreement, which Triton expects to be made binding next month, allows for Qingdao Tianshengda to purchase up to 16,000 tonnes per annum of Ancuabe graphite concentrate with a minimum quarterly amount of 2,500t.
Pricing will be updated every six months and based on prevailing market values.
“We are pleased to announce the offtake term sheet with Qingdao Tianshengda, a highly respected graphite producer,” Triton managing director Peter Canterbury said.
“The term sheet demonstrates the early success of our sales and marketing strategy and the demand for large flake, high purity graphite in the Chinese market and also underlines the quality of the Ancuabe project,” he said.
Mr Canterbury added the company was continuing negotiations with other offtake parties to lock-in at least 50% of its anticipated graphite production by the end of June.
Ancuabe is Triton’s flagship graphite project in Mozambique and has a contained graphite resource of 3.04 million tonnes to underpin a 30-year operation.
The resource covers the T12 and T16 deposits which have an average graphite grade of 6.6% total graphite carbon.
A maiden reserve for Ancuabe was published in mid-December revealing 24.9mt grading 6.2% total graphite carbon.
The project’s definitive feasibility study indicated annual production of 60,000tpa of graphite concentrate was possible over a 27-year period.
According to the study, the project’s post-tax cash flow would be US$753 million based on a graphite concentrate basket price of US$1,435/t.
Ancuabe is about 90km from Mozambique’s deep-water port and has access to existing road and rail infrastructure.
Triton has also reaffirmed numerous times, Ancuabe has the Mozambique Government’s support.
During the next six months, Triton expects to fast track the project, attempt to gain financing, and mobilise a construction workforce to site by the end of the September quarter.
Shares in Triton were up more than 5% in early morning trade at A$0.092.