King Island Scheelite Limited (ASX: KIS) has signed an Off-take agreement for tungsten concentrate with Wolfram Bergbau und Hutten AG (world’s leading supplier of Tungsten powders based in Austria), a 100% owned subsidiary of Sandvik AB.
Sandvik Group is a global engineering group, engaged in mining and rock excavation, metal cutting and such works.
The Wolfram Agreement has been signed for the delivery of 140,000 metric tonne units (MTU), or 1,400 tonnes of tungsten trioxide (WO3), across a 4-year time frame. It is equivalent to the export of around 2,200 tonnes of concentrate, generated by the Dolphin Mine during the mentioned period. The agreement includes a contractual take or pay principles. It is dependent on the KIS (seller) attaining certain financial and operational milestones until 31 March 2021.
These milestones include: the beginning of groundworks post the orders have been placed for longer lead time products, beginning of dry commissioning work and conclusion of ramp up work.
The amount to be obtained for the concentrate is mentioned to the APT (Ammonium Paratungstate) price as quoted by Fastmarkets MB (earlier knows as London Metal Bulletin).
APT is an intermediate product, which contains 88.5 percent WO3, which is globally acceptable benchmark price for tungsten products. Conventionally, the concentrate producers attain in the range of 75-80 percent of the quoted APT price per MTU of WO3 delivered. At present, the APT price lies in between USD265-USD285 per MTU.
At full production, the redeveloped Dolphin Mine is anticipated to generate around 2,000 tonnes of WO3 per year, which is confined in 3,100 tonnes of concentrate. The Wolfram Agreement signifies around 20 percent of its yearly production from KIS’s wholly owned Dolphin Mine.
KIS’s Chairman, Mr Johann Jacobs said that the company was very pleased to have caught the attention of the global renowned Wolfram group, as its first client, in an extremely competitive market condition. With respect to the global market, he said that the APT price had received stability in the duration of the last few months. It has begun to firm after the environmental policies in China had been implemented, as well as the ongoing growth observed in the economies of the world.
Further off-take contracts with other global APT producers have reached an advanced phase for the balance of the yearly produce.
In its interim financial statements for the period ending on 31 December 2018, the company mentioned that it had received approval for the positioning of the processing plant at Southern side of Dolphin Pit.
During the period, two successful capital raisings providing cash funds of $2,868,878 for the issue of 44,348,918 new shares and 15,580,737 new options (an exercise price of 10 cents expiring 1 August 2021) was undertaken. The total cash in hand for the company stood at $1,552,599 as on 31 December 2018 (June 2018: $494,360).
The stock of the company is currently trading at A$0.086 (as on 8 April 2019, 3:10 PM AEST), up by a massive 32.31%.
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