Strandline Resources (ASX: STA) has taken another important step towards bringing its Coburn mineral sands project in Western Australia into production, securing a binding offtake agreement for ~7,000 tonnes per annum of itrs premium zircon product for the first five years of production. The Agreement is with European-based Chilches Materials S.A., a world-leader in providing products for the ceramics, glass, refractory and investment casting markets.
Managing Director Luke Graham said the zircon sales covered by the agreement are expected to generate approximately 6-8 per cent of Coburn’s forecast total revenue. With the previously announced agreements, Strandline now has ~72 per cent of Coburn’s forecast revenue secured via binding offtake contracts.
The existing agreements have a forecast combined value of circa US$475 million over five years, based on the pricing structures contained in the agreements and commodity price forecast assumptions contained in the Coburn updated DFS.
Mr Graham said the remaining Project revenue is expected to be from the balance of premium finished zircon and rutile product (representing ~28% of forecast revenue). Offtake agreements for these remaining products are advancing well.
Coburn’s forecast average annual production of premium finished zircon is 34,000 tonnes. The zircon quality has been confirmed as a ceramic-grade specification (containing +66% ZrO2, good whiteness properties with low impurities) and will be used by Chilches in the production of high quality ceramic opacifiers and in premium refractory applications.
This latest agreement follows the recent investment decision by the Northern Australia Infrastructure Facility (NAIF) to provide a A$150 million loan facility for the development of the Coburn project (see ASX release dated 22 June 2020).
The NAIF facility accounts for a major share of Coburn’s capital requirement of A$260 million (excluding financing costs). The Company is now moving to finalise the balance of Coburn’s funding requirement.
Mr Graham said the signing of another long-term offtake agreement with an industry leader provides further endorsement of Coburn and the high quality of its mineral sands products.
With over 70 per cent of the project’s revenue now underwritten by binding sales contracts with major customers and a significant portion of the development funding secured via the NAIF loan, Strandline is advancing strongly towards development of this world-class project,” Mr Graham said.