Mineral Commodities (ASX: MRC) finalises funding and offtake agreements for Tormin - Kalkine Media

Highlights:

• Mineral Commodities and Blue Bantry have entered into Offtake and Loan Agreements with Garnet International Resources Pty Ltd, a member of GMA Group.
• As per the agreements, Mineral Sands Resources has consented to provide GMA Group with upgraded finished garnet product, in comparison with the current lower margin garnet concentrate product.
• Global mining and development company Mineral Commodities Limited (ASX: MRC) and its empowerment partner, Blue Bantry Investments 225 (Pty) Ltd, have entered into GMA Agreements for offtake and funding with Garnet International Resources Pty Ltd, which is a member of the GMA Group.    

Global mining and development company Mineral Commodities Limited (ASX: MRC) and its empowerment partner, Blue Bantry Investments 225 (Pty) Ltd, have entered into Agreements for offtake and funding with Garnet International Resources Pty Ltd, which is a member of the GMA Group.    

As per the GMA Agreements, Mineral Sands Resources (Pty) Ltd (MSR) has consented to deliver GMA Group with finished garnet product in these volumes- a) 80ktpa during 2024-2025- b) 105ktpa between 2026 and 2028 and c) 125 Ktpa between 2029 and 2033, conditional on renewal at GMA’s election-.

Moreover, GMA Group consented to give MSR US$10 million in loan funding, which can be repaid across five years beginning 1 January next year.

MRC’s association with GMA Group

A global player in industrial garnet, GMA Group is a long-term partner of Mineral Resources in garnet concentrate sales. It offers high-quality garnet abrasive to the waterjet cutting and protective coating industries.

The two parties have agreed on the pricing in the signed agreement; however, it remains subject to the current rise and fall mechanisms and is commercial in confidence.

As per the terms of the agreement, GMA owns the first right of refusal on any finished garnet product developed in excess of the minimum offtake above. The loan of the GMA Group is required to be secured against a Mineral Separation Plant (MSP) with a guarantee by MRC.  

Following MRC’s Strategic Plan, these agreements will bring about a transition into higher value finished products. The ultimate purpose is to wrap up construction of the MSP by the March 2024 quarter.

The company has outlined its Strategic Plan to improve MSR’s mineral sands operations value to maximum value by increasing final product value via transition to finished garnet and ilmenite mineral products from mixed concentrates.

MSR owns 50% of the Tormin Mineral Sands Operation in the Western Cape, South Africa, but will increase to 69% ownership subject to shareholder approval at the upcoming AGM later this month. The GMA Agreements support the third of the three key catalysts targeting returning Tormin to historical profitability (during years 2015-2021 Tormin produced an average EBITDA of US$16 million) and improving cash flow generation, being:

                                                    Data source: Company update

Stock price information

MRC shares were trading at AU$0.045 at the time of writing on 22 May 2023.