THE BOURSE WHISPERER: Carbine Resources (ASX: CRB) has signed a binding offtake agreement for pyrite production from the company’s developing Mount Morgan gold-copper project in Queensland.
Carbine Resources inked the deal with Chinese Trading company IKing International Limited.
The agreement with IKing contains a guaranteed floor price for all the pyrite concentrate delivered with a profit sharing mechanism for prices achieved greater than the floor price, which will be negotiated on an annual basis.
The agreement is for a minimum of 85 per cent of the concentrate produced for the first three years.
Carbine explained the detailed pricing terms associated with the IKing agreement remain confidential due to its commercial sensitivity, however, based on the current and forecast market conditions, the company said it expects to receive at least US$50 per tonne for the first two years of the project and greater than US$70 per tonne for the remaining years.
The pyrite price expected to be received will impact the project’s AISC of $549 per ounce determined by the Feasibility Study released in December 2016.
“The contract achieves one of the more significant milestones in Carbine’s work to bring Mount Morgan into production,” Carbine Resources managing director Tony James said in the company’s announcement to the Australian Securities Exchange.
“The focus on the Chinese pyrite market provides the company with greater confidence in selling the entire pyrite concentrate production at a price beneficial to the project economics.
“With the project approvals process now well advanced with two of the three major approvals completed, we are progressively ticking the boxes and gaining some momentum towards finalising project funding and start up.
“China consumes approximately 16 million tonnes of pyrite a year and the shipping distance from Australia makes it a logical destination for the Mount Morgan concentrate, which will initially start at 200,000 tonnes per annum of premium unroasted iron pyrite.”
According to Carbine’s release, China’s 10 major pyrite-consuming iron and sulphuric acid plants have the capacity to consume more than five million tonnes of pyrite concentrate on an annual basis.
Two of those companies have already offered preliminary support to IKing by the way of letters of intent for the Mount Morgan concentrate following customer testing of supplied samples produced during the feasibility stage of the project.