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Highlights
- Suvo Strategic Minerals (SUV) extends a key offtake agreement until 2030.
- The deal includes a 25% increase in annual minimum order quantities.
- Pittong operations anticipate significant growth in 2025.
Suvo Strategic Minerals (ASX:SUV) has strengthened its long-term business outlook by extending a major take-or-pay offtake agreement with Chaozhou Chengcheng Industrial. The extended agreement ensures continued supply of hydrous kaolin from the company’s Pittong operations in Victoria until 2030.
The five-year extension carries a value of $6.56 million and secures a minimum supply commitment of 8,750 tonnes of hydrous kaolin, a notable increase from the 4,275 tonnes covered in the previous three-year agreement.
Boost in Demand and Business Growth
With this extension, the company has achieved a 25% rise in annual minimum order quantities. Executive Chairman Aaron Banks highlighted the growing demand, noting that recent business expansion, particularly through its local distribution partner, has contributed to this increase.
The demand surge from a key customer last month, along with this newly extended agreement, is expected to drive a significant rise in sales volumes in 2025. This aligns with the company’s broader growth strategy, reinforcing its position in the kaolin market.
Pittong operations have already demonstrated financial strength, reporting positive EBITDA of $510,000 and a net profit of $390,000 in the last quarter. These figures underline the site’s profitability and potential for further expansion.
Expanding Product Development and Operations
Suvo Strategic Minerals, with a market capitalisation of $33.31 million, continues to explore new product development opportunities to enhance its kaolin sales. The company’s Pittong operations include the Lal Lal and Trawalla deposits near Ballarat, Victoria.
Lal Lal is known for its high-brightness ore, which is valuable for applications such as pharmaceuticals and cosmetics. Meanwhile, Trawalla, spanning 236 hectares, is fully prepared for mining with an approved work plan and land access agreement in place.
Kaolin, a versatile mineral, is widely used in ceramics, medicine, coated paper, food additives, toothpaste, and light-diffusing materials. The continued expansion of Suvo Strategic Minerals into this market highlights its commitment to capitalizing on rising demand and securing long-term growth.
With a strong foundation and a key customer agreement extended, the company is positioned for a promising 2025, anticipating further gains in both sales volume and financial performance.
