Mineral Commodities firms up key garnet offtake contract
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Mineral Commodities (ASX:MRC) has reached a key garnet offtake agreement with GMA Group that provides a solid revenue flow for the next three years.
With GMA taking up 65 per cent of the company’s garnet production in 2020, the new 100,000 tonne per annum contract for garnet concentrate from its Tormin mineral sands project in South Africa continues the long-term relationship between the two parties.
The three-year non-exclusive offtake agreement is backdated to the beginning of this year with automatic renewals after that subject to a minimum six-month termination period and the usual commercial price reviews.
MRC will deliver 635,000t of GMA’s existing garnet product to GMA’s Saldanha facility and will also provide GMA with an area at Tormin to stockpile garnet.
“This offtake agreement with our long term partner GMA forms the foundation of our revenue base at Tormin,” chairman David Baker said.
“GMA’s annual commitment represents 65% of our 2020 garnet production, underlining the importance of this partnership to our company.
“We welcome the opportunity to renew and formally reset our long-standing relationship with GMA and explore new opportunities to expand our mutually beneficial commercial interests.”
Mineral Commodities’ Tormin project has been in production since 2014 and is expected to remain a long-term source of revenue for the company given that it is an ‘active placer’ deposit where mineralisation is constantly replenished by tidal action.
The company has been mining the same 12km beach though it has moved into unmined resource areas to give the grade in mined areas time to replenish itself.
Resources are currently pegged at 456Mt grading 6.8 per cent total heavy minerals.
Tormin generated the lion’s share of the company’s 2020 revenue of $US59.76m ($78.03m).
This article was developed in collaboration with Mineral Commodities, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.