THE BOURSE WHISPERER: Sheffield Resources (ASX: SFX) signed two memorandums of understanding (MoUs) for the future sale of premium zircon from the company’s Thunderbird mineral sands project, in Western Australia.
Sheffield Resources said the MoUs are non-binding and have been signed with an industry leading Indian ceramics company, Ruby Ceramics Pvt Ltd, and a well-established European ceramics company, CFM Minerales s.a. of Spain.
Sheffield declared the combined agreements represent up to approximately 20 per cent of the estimated total volume of premium zircon expected to be produced from Stage 1 of the Thunderbird project.
The company explained the signing of the MoUs came after product testing and discussions between the parties, adding that all involved have affirmed their intentions to finalise negotiations and enter binding offtake agreements over the coming months.
Sheffield indicated it is also in negotiations with other potential consumers of its products and will update the market as required.
“The MoUs have been signed with zircon consumers with a high standing in the industry, confirming Sheffield’s capability of supplying the global market with very high quality products once in production,” Sheffield Resources managing director Bruce McFadzean said in the company’s announcement to the Australian Securities Exchange.
“The recent BFS confirms that zircon will represent 62 per cent of the estimated project revenues and we look forward to advancing binding offtake agreements with both Ruby and CFM, as cornerstone premium zircon customers of the company.
“In conjunction with these arrangements, we are working with our financial advisor, Azure Capital, to progress the funding for project development.”
Sheffield claim Thunderbird to be one of the largest and highest grade mineral sands discoveries in the last 30 years.
A Bankable Feasibility Study has demonstrated Thunderbird to be a technically low risk, modest capex project that should generate strong cash margins from global levels of production over a long mine life of 42 years.
Subject to permitting activities, Sheffield Resources is targeting project construction commencing in late 2017 with initial production in 2019.