Walkabout Resources shores up additional graphite supply from Lindi Jumbo

Within the space of a week, Walkabout Resources (ASX: WKT) has signed its second offtake agreement to supply graphite from the Lindi Jumbo project in Tanzania.

The Perth-headquartered company informed shareholders today that the second binding offtake agreement had been locked-in with graphite products manufacturer Qingdao Risingdawn Graphite Technology (QRGT) from China.

The private company, based in Shandong, is currently constructing an additional expandable graphite plant within its upgrading facilities and is in the process of securing suitable graphite feedstock for the unit.

Walkabout noted that QRGT would also use Lindi Jumbo graphite in the manufacture of graphite pipes which employ licenced processing technologies.

The binding offtake agreement with QRGT comes in the wake of Walkabout signing its first Lindi Jumbo binding offtake agreement with Inner Mongolia Qianxin Graphite last week.

Walkabout executive chairman Trevor Benson said the company was seeing an increased level of confidence in its product and a growing interest in its ability to deliver a stable supply of quality, large flake graphite.

“This binding offtake term sheet with Qingdao Risingdawn together with the recently announced Inner Mongolia Qianxin Graphite term sheet substantially reduces the demand-side risk of the project and is very important for our ongoing funding discussions,” he said.

Key terms

Under the binding terms of the agreement signed with QRGT, Walkabout will deliver 10,000 tonnes of flake graphite concentrate into China over three years once production has started.

While specific details of the term sheet agreement remain commercially sensitive, Walkabout said a final offtake agreement was set to replace the term sheet, estimated to be finalised during the second-half of 2019.

Walkabout has now secured the sale of up to 75% of its planned production of high-purity flake graphite concentrate from Lindi Jumbo for the first three years of operation, equating to between 50,000tpa and 60,000tpa.

While a second term sheet has been finalised, Walkabout said it was continuing to advance more offtake discussions with end users, upgrading facilities and traders.

Walkabout expects to process 230,000tpa of ore from the Lindi Jumbo operation to produce 40,000tpa of flake graphite.

The project is in Tanzania’s south-east and about 200km from the country’s Mtwara port.

Walkabout’s shares added 2.7% in afternoon trade to $0.185.