Technology Metals Australia Limited (ASX: TMT) (“Technology Metals” orthe “Company”) is pleased to announce the execution of a non-binding.
Memorandum of Understanding (“MoU”) with CNMC Ningxia Orient.
Group Company Ltd. (“CNMNC”) in relation to establishing a binding V2O5 offtake agreement over vanadium production from the Gabanintha Vanadium Project (“Project”).
TMT and CNMNC have agreed to use their best endeavours to negotiate a definitive and binding offtake agreement (“Agreement”) for the supply and purchase of vanadium pentoxide (V2O5) product that the Company intends to produce from the Project.
“We are very excited to have entered into this agreement with CNMNC, a China Nonferrous. Metal Mining (Group) company, as a key step in establishing a strong and supportive customer base for the development of the high quality globally significant Gabanintha Vanadium Project. The very high purity of the Gabanintha vanadium pentoxide (V2O5) product provides a clear
competitive advantage for the Project”, said Ian Prentice, Managing Director of TMT.
KEY TERMS DEFINED IN THE TMT – CNMNC MOU
The MoU between TMT and CNMNC establishes a framework for ongoing discussions and negotiations aimed at delivering a definitive and binding offtake agreement (“Agreement”) over the coming months. Key terms that have been defined and agreed upon in the MoU are:
• Initial minimum annual quantity of V2O5 to be purchased of 2,000Tpa on a take-or-pay basis,
• CNMNC to purchase such quantity of product that is available, up to 2,000Tpa, during the ramp-up and commissioning phase of the Project,
• Pricing to be negotiated based on the Metal Bulletin V2O5 Pricing Index incorporating a floor
and ceiling price structure,
• Sales to be based on FOB at Port of Fremantle or similar,
• Minimum term of three (3) years with an option to renew for an additional three (3) years, and
• Consideration for CNMNC to refer TMT to its parent entity, CNMC, to discuss additional Project support, including scope for financing and/or EPC arrangements
The next steps to progress towards finalising the Agreement include due diligence to be completed by both parties in conjunction with the progression of the Gabanintha Definitive Feasibility Study (“DFS”) and further refinement and agreement of the key off take terms.
The MoU is effective until 1 October 2019 unless the parties mutually agree to formally terminate or extend the term.
“We are very pleased to be establishing this relationship and engaging in offtake discussions with Technology Metals Australia as they progress the development of the very high quality, low-cost Gabanintha vanadium project”, said Mr Yi Junping, Party Secretary & Deputy General Manager of CNMNC Special Materials Co., Ltd.
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