Sheffield Resources has inked its first binding deal with a leading Indian ceramics company for the future sale of premium zircon from its Thunderbird mineral sands project.

Perth-based Sheffield (ASX:SFX) will supply Ruby Ceramics with 6000 tonnes of premium zircon annually — about 12 per cent of the estimated total volume of premium zircon to be produced from stage one of the project.

The deal is for an initial three-year period with annual extensions.

Investors welcomed the news with the stock gaining 7 per cent to 53c in late morning trade.

Sheffield’s managing director Bruce McFadzean said the deal was a strong endorsement of Thunderbird and the quality premium zircon to be generated from the project over its 42-year life.

“This maiden binding offtake [sales] agreement is a milestone achievement for Sheffield and is an important de-risking step as we progress project development,” he said.

Talks were continuing towards finalising agreements with other parties for the sale of premium zircon and zircon concentrate and Sheffield’s high quality low temperature roast (LTR) ilmenite.

Collectively, the agreements account for an estimated 70 per cent of premium zircon, 45 per cent of zircon concentrate and 45 per cent of LTR ilmenite products from Stage 1 of Thunderbird.

Thunderbird is one of the largest and highest grade mineral sands discoveries of the past 30 years.

Sheffield’s Bankable Feasibility Study shows Thunderbird is a technically low risk, modest capex project that generates strong cash margins from production over a mine life of 42 years.

Initial production from Thunderbird is expected in 2019.