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Hastings Technology Metals Limited (ASX:HAS) inked an off-take supply contract with Chinaâs Sky Rock Rare Earth New Materials Co Ltd for the term of five years. This news sent the Hastings shares to trade at higher level when then settled with an increase of 3.03% to close at $0.170 on 29 November 2018.
In an announcement to Australian Securities Exchange, Hastings Technology Metals Ltd (ASX:HAS) stated that the company has agreed to supply Mixed Rare Earths Carbonate from its Yangibana Rare Earths Project to Sky Rock. However, the contract remains conditional upon production starting within two years at Yangibana.
As per the term of contract, 2,500 tonnes of carbonate will be supplied each year for the fixed term of five years with two-year initial ramp-up supply flexibility which reflects the âAnnual Purchase Quantityâ that both the parties have agreed.
Pricing mechanism to be followed under the arrangement is reportedly based on Asian Metalsâ published â90 days midâ Ex Works China price in RMB/kg. It is in connection with MREC product price before shipping via FOB Fremantle Port, Western Australia. Further, it has been agreed that all payments will be in U.S. Dollars.
Charles Lew, Executive Chairman of Hastings commented that âexecution of this 5-year mixed rare earths carbonate contract is another important step towards funding and development of the Yangibana Rare Earths Project so that Hastings can supply high grade Neodymium and Praseodymium (NdPr) to its various international offtake customers.â
Under the contract, the purchaser i.e. Sky Rock, needs to supply Irrevocable Letter of Credit sufficient to cover 100% of the FOB price of the Annual Purchase Quantity. However, it is entitled to undertake independent sampling and analysis of the product at Fremantle loading Port before shipment. On regulatory approval front, the announcement read that governing law for validity, construction and performance of Off-take Contract is by Laws of England and Wales and subject to Singapore International Arbitration Centre Rules.
Yangibana Rare Earths Project is 100% owned by Hastings Technology. Located in Gascoyne region of Western Australia, the project is a host to rare earths deposits rich in praseodymium and neodymium. HAS stock has slipped by 2.94% in the past 5 five days and over the last one year, the stock has witnessed a negative performance change of massive 50.75%.
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