Under the contract, China-based Inner Mongolia Qianxin Graphite will take up to 50% of Walkabout’s planned annual production from Lindi for the first three years.
The detailed terms remain undisclosed due to their commercially sensitive nature, but Inner Mongolia Qianxin will purchase a minimum of 10,000 tonnes per annum of flake graphite from Lindi and can secure up to 20,000tpa.
“Signing the first binding offtake term sheet is a significant milestone for Walkabout,” the company’s executive chairman Trevor Benson said.
He added the agreement was a result of months of ongoing negotiations and testwork.
“It’s clear that end-users and upgrade facilities who have recognised our premium product, can now see a more definite timeline to production.”
“This has prompted them to take action to secure supply from what is Africa’s standout large-flake graphite deposit.”
Mr Benson pointed out the offtake agreement for up to 50% of the company’s planned production for Lindi also reduced financing risk.
“We look forward to being able to share updates with the market as we continue to advance discussions on both additional offtake agreements and financing.”
Lindi graphite project
An enhanced definitive feasibility study for the Tanzanian-based project was released last month and revealed capital cost estimates of US$27.8 million to generate life of mine revenue of US$1.445 billion over 24 years.
Underpinning the study was an updated reserve of 5.5 million tonnes grading 17.9% total graphitic carbon for 987,000t of contained graphite.
The study revealed Lindi has a post-tax net present value of US$197 million and would attract cash margins of US$1,000/t free on board.
Via the proposed operation, Walkabout expects to process 230,000tpa of ore to produce 40,000tpa of flake graphite.
The project is in Tanzania’s south-east and about 200km from the country’s Mtwara port.