Technology Metals Australia Strikes Chinese MoU

THE BOURSE WHISPERER: Technology Metals Australia (ASX: TMT) has executed a non-binding Memorandum of Understanding (MoU) with CNMC Ningxia Orient Group Company Ltd. (CNMNC).

Technology Metals Australia explained the deal is in relation to establishing a binding vanadium pentoxide (V2O5) offtake agreement over vanadium production from the company’s Gabanintha vanadium project.

CNMNC is a rare metal manufacturer headquartered in Shizuishan, Ningxia Province in China.

CNMNC is a controlled subsidiary of China Nonferrous Metal Mining Co., Ltd and its vanadium alloy production business, CNMC Ningxia Orient Group Special Materials Co., Ltd., produces vanadium nitrogen alloys and ferrovanadium for use in the Chinese steel industry.

“We are very excited to have entered into this agreement with CNMNC, a China Nonferrous Metal Mining (Group) company, as a key step in establishing a strong and supportive customer base for the development of the high quality globally significant Gabanintha vanadium project.

“The very high purity of the Gabanintha vanadium pentoxide (V2O5) product provides a clear competitive advantage for the project.”

The MoU between TMT and CNMNC establishes a framework for ongoing discussions and negotiations aimed at delivering a definitive and binding offtake agreement.

Key terms that have been defined and agreed upon in the MoU are:

Initial minimum annual quantity of V2O5 to be purchased of 2,000 tonnes per annum on a take-or-pay basis;

CNMNC to purchase such quantity of product that is available, up to 2,000 tonnes per annum, during the ramp-up and commissioning phase of the project;

Pricing to be negotiated based on the Metal Bulletin V2O5 Pricing Index incorporating a floor and ceiling price structure;

Sales to be based on FOB at Port of Fremantle or similar;

Minimum term of three years with an option to renew for an additional three years; and

Consideration for CNMNC to refer TMT to its parent entity, CNMC, to discuss additional project support, including scope for financing and/or EPC arrangements.

TMT outlined the next steps to progress towards finalising the agreement include due diligence to be completed by both parties in conjunction with the progression of the Gabanintha Definitive Feasibility Study (DFS) and further refinement and agreement of the key off take terms.