Syrah signs offtake deal with Chinese partner
PERTH (miningweekly.com) – ASX-listed graphite hopeful Syrah Resources has signed a binding offtake agreement with China Aluminium International Engineering Corporation (Chalieco) over its Balama graphite and vanadium project, in Mozambique.
Under the terms of the agreement, Chalieco would purchase 80 000 t/y of graphite from Syrah, at various size fractions, and would have exclusive distribution rights into China and Hong Kong.
Chalieco would source its graphite product exclusively from Syrah.
Prices would be negotiated on a quarterly basis, and would be based on the prevailing market price.
Syrah told shareholders on Tuesday that as an expected low-cost producer, the Balama project would demonstrate robust economics even at cyclically low graphite prices. However, the company was of the opinion that flake graphite prices would likely increase over the next five years, owing to a confluence of factors including ongoing supply pressure and increased flake graphite demand from electric vehicles and battery storage applications.
Syrah would continue negotiations with other potential offtake partners around the world, the company said.
A definitive feasibility study on the Balama project was also expected shortly, along with the necessary regulatory approvals.
A 2013 scoping study for the Balama project estimated that the 1.2-million-tonne-a-year operation would require a capital investment of $91.6-million to complete, and would have a mine life of around seven years.
In 2014, Syrah identified the possibility of developing a vanadium operation at the Balama graphite project, for a cash injection of $80-million. The 2014 scoping study assumed that the project would produce 3 804 t/y of vanadium powder or flake, grading 98%, and 1 245 t/y of vanadium powder, grading 99.9%, over a 20-year period. These estimates are based on the inferred resource of 1.15-billion tonnes, grading 10.2% graphitic carbon and 0.23% vanadium oxide.
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