AMN - TANZANIA: Volt secures third Chinese offtake

Volt Resources has signed a detailed offtake agreement with a Chinese company, which includes providing 5000 tonnes annually of flake graphite concentrate from Stage 1 of Volt’s Namangale project in Tanzania. It is the third agreement the company has signed with a China-based group since mid-May.

The offtake term sheet has been signed with Guangxing Electrical Materials (GEM) with the parties committed to completing a binding offtake agreement by September 30. It is for an initial contract term of five years with an option to extend for a further five.

The Chinese agreements are a direct consequence of a recent visit by Volt’s management to China to meet prospective graphite customers. The Board believes it is critical to have a strong presence in China given it is the world’s largest graphite market.

However, rather than be overly reliant on a few large clients, the Board believes it is prudent to diversify risk across a larger client base in China that have varying product requirements. Discussions are also continuing with potential customers in South Korea, Japan, North America and Europe.

Based on all current and prospective customer agreements, if the applicable conditions precedent are met then Volt could secure minimum commitments for 26,000 tonnes per annum of flake graphite concentrate by quarter four of 2017. This would adequately cover Stage 1 production, which is now targeted at 20,000 tonnes per annum of graphite concentrate and potential downstream products for the battery anode market

GEM, which is an operating subsidiary of Qingdao Guangxing Electronic Materials Group, processes and distributes value added graphite products to a range of end-user markets across China and for export.

Earlier in June, the company signed a broad non-binding cooperation agreement with China National Building Materials General Machinery to deliver a complete solution to develop the Namangale project Stages 1 and 2. It also potentially includes a 10,000-15,000 tpa initial offtake agreement from Stage 1 production.

Volt previously signed an agreement with Aoyu Graphite Group, which includes indicative annual offtake quantity of 10,000-20,000 tonnes.

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