Emerging natural graphite supplier Volt Resources (ASX: VRC) has reached another key milestone in the Stage 1 development of its Bunyu project in Tanzania, with the signing of a binding offtake agreement with China’s Qingdao Tianshengda Graphite.
The agreement was signed between Tianshengda and Volt’s 100%-owned subsidiary Volt Graphite Tanzania for the supply of 9000 tonnes per year of Bunyu product over a five year period.
Tianshengda is an integrated graphite processor and distributor across China and internationally.
Based in Shangdong Province, the company has a substantial annual capacity to further process graphite by producing value-added products including expandable graphite, flake graphite and powder, as well as supplying graphite to the lithium-ion battery market.
Volt’s binding offtake agreement with Tianshengda will incorporate the size ranges of products to be produced in Bunyu’s Stage 1 development and the planned expansion to Stage 2, and has an option for a further five year term by mutual agreement.
The initial agreement is conditional upon Volt Graphite Tanzania confirming completion of Stage 1 construction and commissioning for mine development, and upon completion of the processing plant for the treatment of sufficient ore from the Bunyu project.
The selling price under the agreement will be determined by the prevailing market price for flake graphite products (adjusted for mesh size and total graphitic carbon percentage) and agreed prior to the start of each contract half year, providing Volt and Bunyu exposure to anticipated growing demand and stronger prices for quality flake graphite.
Bunyu Stages 1 & 2
Stage 1 of the Volt’s Bunyu project is focussed on the development of a nominal 20,000 tonnes per year to 25,000tpa graphite mine and processing facility in Tanzania, with planned exports of graphite products to overseas markets including the United States and China.
The company’s proposed Stage 2 development is an expansion of Stage 1 production, and will be based on market demand for Bunyu’s graphite products.
It will leverage off the mine’s large-scale graphite mineral resource and Bunyu’s close proximity to critical infrastructure.
Stage 2 is targeted to meet expected significant increases in demand for coarse flake graphite in the expandable graphite market.
It will also service demand for fine flake size products used in battery anode material and other existing and evolving industrial uses for micro carbon products.
Second customer for Volt concentrate
The binding offtake agreement with Tianshengda is the second of its kind for the Bunyu project and gives Volt Resources a customer base on both sides of the Pacific Ocean.
In March 2017, Volt signed an agreement with US-based Nano Graphene for a minimum 5000 tonnes of flake graphite concentrate grading 98%, over five years commencing in January 2018.
The agreement included the flexibility to increase the sales volume as Nano Graphene’s global footprint expands, as well as an option to renew for a further five years after the initial term.
Volt chief executive Trevor Matthews said the agreements with Qingdao Tianshengda Graphite and Nano Graphene validate the confidence in Bunyu’s potential, adding that the company is progressing discussions with additional parties regarding further offtake opportunities.
At mid-afternoon, shares in Volt Resources were up 10.53% to $0.021.