HIGHLIGHTS
·MEMORANDUM OF UNDERSTANDING EXECUTED WITH SHAANXI FENGYUAN VANADIUM TECHNOLOGY DEVELOPMENT CO, LTD.
·FENGYUAN IS ONE OF CHINA’S LEADING PRODUCERS OF VANADIUM NITROGEN ALLOY (VN) WITH PRODUCTION CAPACITY OF 10,000 TPA VN.
·MOU ESTABLISHES THE FRAMEWORK FOR A BINDING V2O5 OFFTAKE AGREEMENT COVERING 3,000 TPA OF TMT’S PROPOSED AVERAGE 12,800 TPA V2O5 PRODUCTION.
·THE AGREEMENT IS INTENDED TO BE FINALISED IN THE COMING
MONTHS.
·CONVERSION OF CNMNC MOU TO A BINDING AGREEMENT PROGRESSING WELL WITH SHORT EXTENSION OF TERM AGREED TO FACILITATE ITS CONCLUSION.
·TMT NOW HAS APPROXIMATELY 40% OF PROPOSED AVERAGE ANNUAL PRODUCTION COVERED UNDER OFFTAKE MOU’S.
Technology Metals Australia Limited (ASX: TMT) (“Technology Metals” or the “Company”) is pleased to announce the execution of a non-binding Memorandum of Understanding (“MoU”) with Shaanxi Fengyuan Vanadium Technology Development Co., Ltd. (“Fengyuan”) in relation to establishing a binding V2O5 offtake agreement over vanadium production from the Gabanintha Vanadium Project (“Project” or “GVP”).
Fengyuan, headquartered in Shanyang County, Shaanxi Province, Peoples Republic of China, a high-tech vanadium – nitrogen (“VN”) alloy producer operates the World’s most advanced VN alloy production technology. Fengyuan has capacity to produce 10,000 Tpa of VN, requiring approximately 14,300 Tpa of V2O5 feedstock.
TMT and Fengyuan 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.
In addition, the Company has held constructive discussions with CNMNC on converting the previously announced MOU to a binding Agreement. The parties are highly encouraged with progress achieved and have mutually agreed to extend the term of the MOU until 30 November 2019.
KEY TERMS DEFINED IN THE TMT – FENGYUAN MOU
The MoU between TMT and Fengyuan 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 3,000Tpa on a take-or-pay basis,
· Fengyuan to purchase such quantity of product that is available, up to 3,000Tpa, during the
ramp-up and commissioning phase of the Project,
· Pricing to be negotiated based on the Metal Bulletin V2O5 Pricing Index (or similar) incorporating a floor and ceiling price structure,
· Sales to be based on CIP at Fengyuan’s selected port of choice in China, and
· Minimum term of five (5) years with an option to renew for an additional five (5) years.
The next steps to progress towards finalising the Agreement include due diligence to be completed by both parties in conjunction with further refinement and agreement of the key off take terms.
The MoU is effective until 31 December 2019 unless the parties mutually agree to formally terminate or extend the term.
“We are very excited to have now entered into two offtake MOU’s with leading Chinese vanadium alloy producers over a total of 5,000 Tpa of the proposed average 12,800 Tpa production. Discussions with prospective development partners are progressing extremely well following the delivery of the very high quality DFS on the development of the globally significant GVP combined with the very high purity of the V2O5 product”, commented Ian Prentice, Managing Director of TMT.
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