TNG nails titanium off-take with Swiss giant, giving its Mount Peake funding strategy a further boost
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Special Report: Strategic metals developer TNG (ASX:TNG) says its Mount Peake vanadium-titanium-iron project in the Northern Territory is now fully covered by customer sales contracts after signing a binding life-of-mine off-take agreement with the multi-billion dollar Swiss-based specialty chemical distributor DKSH.
TNG emerged from a trading halt this morning to announce the agreement, which will allow DKSH to purchase, on a life-of-mine basis, up to 100 per cent of the titanium dioxide (TiO2) pigment that will be produced by Mount Peake.
The agreement follows a Binding Term Sheet signed with DKSH in October last year, under which the parties agreed key terms for the off-take.
Based in Zurich, DKSH is a publicly-listed (SWX: DKSH) Market Expansion Services provider with an extensive presence across the Asia-Pacific region.
With 825 business locations in 35 countries and 33,000 specialised staff, it is one of the top-25 Swiss companies ranked by sales and employees. In 2018, DKSH generated annual net sales above US$11 billion.
The new off-take deal builds on the life-of-mine off-take agreement already in place with WOOJIN Metals from Korea for a minimum 60 per cent of its vanadium output and a binding Term Sheet in place with Gunvor group in Singapore for iron products.
“Together with the binding agreements for vanadium and binding terms for iron products already in place, the signing of this Agreement with DKSH marks another important step in TNG’s commercial strategy for the Mount Peake Project and paves the way for project financing to proceed,” the Company said in a statement.
“This is a really exciting milestone for TNG and marks the formalisation of our strong relationship with DKSH, one of the world’s leading Market Expansion Services providers,” said TNG managing director, Paul Burton.
“We have now converted the previously announced Binding Term Sheet with DKSH into a binding off-take agreement within the timeframe that we set – which is a great achievement for TNG, our shareholders and the Mount Peake Project.
“DKSH is a great fit for us given the technological breakthrough we achieved last year with our ability to produce titanium dioxide pigments. We are really looking forward to working closely with them as we complete the funding package for Mount Peake and move the Project towards development and construction.”
The off-take deal with DKSH continues the distinct European alignment for TNG and the Mount Peake Project.
Late last year, the Company mandated the leading German-based resource financier KfW IPEX-bank to structure the total debt package of up to US$600 million (A$830 million) to underpin the financing of the Mt Peake Project.
Under the mandate, KfW is expected to structure, coordinate, lead and manage the debt finance syndicated, including advising on the best strategy to maximise cover instruments from the Export Credit Agencies (ECA’s).
TNG also has a long-standing relationship with another key European partner, its technical and engineering partner, Germany’s SMS group.
The off-take deal covers the titanium dioxide pigment products that will be produced using TNG’s proprietary TIVAN®hydrometallurgical process.
This follows a technical breakthrough announced last year, which has seen the development of an innovative new process based on based on the conventional TiO2sulphate route.
TNG says the TIVAN® titanium feedstock’s low iron content is a significant advantage over standard TiO2feedstocks.
“Low-iron feedstock has the potential to minimise the environmental impact compared to a standard sulphate titanium pigment production process – an important competitive and strategic advantage for TNG,” it said.
“This recent technical breakthrough has the potential to further improve TNG’s TiO2product quality, price and the overall economics of Mount Peake while at the same time reducing the technical complexity and environmental impact of the Project.”
Last year was a big year for TNG and Mount Peake with the company securing key Territory and Federal Government approvals for the Mount Peake mine site, located 235km north of Alice Springs.
The signing of a landmark Native Title Mining Agreement with the local indigenous group and Central Lands Council also paved the way for the grant of the Mining and Ancillary leases for the project site.
Last week, TNG announced that it had engaged leading construction group McMahon Services to progress the program of work for the non-process infrastructure requirements for the project site itself and the proposed site of the planned TIVAN®refinery in Darwin Port.
The Front-End Engineering and Design (FEED) study for the project is also now in full swing, and is being progressed by SMS group.
Burton said the completion of the titanium off-take will add “significant momentum” to the company’s funding and commercialisation strategy for Mount Peake.
“Together with the Front End Engineering and Design work currently underway, these agreements will effectively underwrite our funding strategy for Mount Peake.”