JOHANNESBURG (miningweekly.com) – ASX-listed Strandline Resources has secured a binding offtake agreement for 100% of the zircon/monazite product to be produced at its Fungoni mineral sands project, in Tanzania.

Marking it as a major step towards bringing its first mineral sands project into production, the company said on Monday that the agreement with China’s zircon sand and rare earth consumer Hainan Wensheng High-Tech Materials would account for more than 62% of the project’s revenue.

The remaining project revenue is expected to be from chloride ilmenite (28%) and rutile (10%), for which offtake agreements are well advanced.

Fungoni’s high-unit value orebody assemblage and low costs of about $30-million, including mine infrastructure, port facilities, working capital, land access, pre-production mining, owner's costs and project contingencies of 10%, underpin strong financial returns for Strandline. The project has a payback period of 2.7 years from the start of construction and a first quartile revenue-to-cost ratio of 2.7.

“Establishing this strategic offtake relationship with Wensheng, the largest integrated mineral sands processor in China, is a significant milestone for Strandline.

“The agreement provides a strong endorsement of the Fungoni project and the premium quality of the zircon and monazite which will be produced over the life of the mine,” said Strandline MD Luke Graham.

He added that it also paved the way for Strandline to finalise project funding, ensuring the company remained on track to unlock the substantial value of what is the first in its pipeline of exciting and prospective mineral sands assets.

The Fungoni definitive feasibility study completed in October 2017 confirms the project would deliver strong financial returns, has a high-unit value product suite, is capital-efficient, and demonstrates the strategic potential of the company’s portfolio of mineral sands assets in Tanzania.

The project has a maiden ore reserve of 12.3-million tonnes at 3.9% total heavy mineral, with opportunities to grow reserves and mine life, further increasing financial returns.