Valence Industries signs three-year graphite sales contract

THE BOURSE WHISPERER: Valence Industries (ASX: VXL) has signed a binding three year multi-product graphite sales contract with an un-named Asia Pacific-based customer.

Valence said the contract was one of significant for the company saying it provides for sales in excess of US$50 million ($67.6 million) over the next three years.

The company explained the customer will be purchasing its graphite for use in industries including Aluminium, Steel, Metallurgical, Chemical, Refractory, Ceramics, Construction, Plastics and Rubber and Expandable Graphite Products.

The contract will be focusing on Valence’s coarser flake graphite production with benchmark pricing exceeding the company’s previously announced weighted average price of US$1,335 per tonne and includes take or pay provisions on the volumes ordered.

“This sales contract is in addition to the Heads of Agreement and adds to the multiple existing sales contracts entered into by Valence Industries,” The company explained in its ASX announcement.

“The delivery profile in the contract is timed to match production from the company’s existing Uley graphite facilities.

“This customer will be supplied initially from the existing 14,000 tonnes per annum plant and then from the expanded production facilities.”

Valence Industries advised it is ramping up the level of current production from its existing facilities to reach full production capacity by the end of September 2015.

Shipments are expected to progressively increase over this period in line with customer orders as production rates increase and volumes for specific orders (in purity and sizing) are produced.