Zeotech targets early cash flow at Toondoon with proposed multi-product kaolin offtake deal

Mineral processing technology company Zeotech (ASX: ZEO) has signed a non-binding memorandum of understanding (MoU) with a leading Chinese trading house for a potential offtake agreement related to the company’s high-quality kaolin product from its Toondoon project in Queensland.

The MoU with Jiangsu Mineral Sources International Trading (MSI), one of the world’s foremost independent suppliers of bulk raw materials, covers the potential distribution of Zeotech’s low-iron kaolin, pink cosmetic-grade kaolin and bauxitic clay direct shipping ore (DSO) products.

The two businesses are now free to negotiate the terms of a potential offtake or distribution agreement under which MSI could purchase a range of product levels from Zeotech over a five-year term.

Early cash flow pathway

“We are excited to be able to work with MSI towards a pathway to early cash flow from our ready-to-mine kaolin resources as we continue to progress with the accelerated commercialisation of our AusPozz high-reactivity metakaolin project,” chief executive officer James Marsh said.

“Toondoon kaolin has an exceptional natural purity, which has led to this DSO opportunity—made especially compelling by the inclusion of the materially higher-value cosmetic-grade pink kaolin and the bauxitic clay, which was initially considered overburden but can now add value to the overall mining project.”

Located north of the Sunshine Coast, Toondoon contains one of the highest-grade kaolin deposits in Australia held under an approved mining lease.

Open-cut operation

The project, which Zeotech is developing as a simple open-cut mining operation, is connected to the Port of Bundaberg via an approved B-double route of approximately 260 kilometres.

Zeotech has been working closely with the Gladstone Ports Corporation regarding the utilisation of the Bundaberg port’s recently installed bulk mineral conveyor, ship-loading system and DSO storage area.

Mr Marsh said these facilities were perfectly positioned and ideally set up for bulk kaolin business use.

Terms of the MoU

Under the MoU with MSI, the Chinese trading company may acquire 800,000 tonnes of low-iron kaolin DSO, 150,000 tonnes of pink cosmetic-grade kaolin DSO and 1,500,000 tonnes of bauxitic clay DSO over the proposed initial five-year period.

Mr Marsh said the potential sales of bauxitic clay DSO product presented a value-add opportunity for the company, as it could provide a revenue stream for a product that it would otherwise have stockpiled—substantially enhancing overall mining economics.

The MoU expires on 31 December 2025 and may be terminated by either party with 30 days written notice.