Suvo Strategic Minerals is officially negotiating first offtake from its White Cloud kaolin project in WA after signing a term sheet with an interested party.

The term sheet outlines C.M.M Toye Industrial Mineral Consultants’ (CMM) indicative interest in purchasing 10,000 tonnes per annum of kaolin from Suvo (ASX:SUV) for $850 per tonne.

This deal is subject to a formal agreement being struck and the commencement of commercial production at Suvo’s Mt Marshall project within White Cloud.

The parties have agreed to consult on a formal deal, with a targeted agreement date of no later than December 31, 2022.

Suvo executive director Aaron Banks said the agreement was a significant milestone for the company.

“The entry into the term sheet with CMM to progress one of the many expected offtake agreements from our White Cloud project at this early stage validates not only the quality of our kaolin, but the speed at which the company is systematically progressing this unique resource,” he said.

CMM managing director Chris Toye said the company was equally excited by the prospect of sourcing kaolin from White Cloud. CMM is a substantial buyer of high-grade kaolin for use in the manufacture of specialist ceramic products.

“To potentially secure a source of high quality kaolin from a previously undiscovered deposit is extremely exciting and we look forward to working with the team at Suvo to develop this relationship further over time,” he said.

Discussions between the pair are ongoing regarding an expansion of the term sheet to include a distribution arrangement.

Today’s announcement comes just a month after SUV boosted its White Cloud project resource by around 13 per cent to 39.5 million tonnes.

The company also recently struck a two-year agency and distribution deal with French multinational Imerys S.A. over output from its Pittong hydrous kaolin operations in Victoria.

Suvo acquired Pittong from Imerys S.A. in a deal made late last year. The project is on track to achieve earnings before interest, tax, depreciation and amortisation of $2.1 million this year.

 

This article was developed in collaboration with Suvo Strategic Minerals, 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.

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