Democratic Republic of Congo – The cobalt offtake agreements and commodity-linked debt funding relate to Cape Lambert Resources’ planned production of cobalt and copper concentrates from its Kipushi cobalt tailings projects, located in the Democratic Republic of Congo (DRC).
This follows the engagement of UK-based Metals Risk Management (MRM) by Cape Lambert Resources as its strategic adviser in June 2017 to review, assess and advise on the existing offers of concentrate offtake and commodity linked funding that have already been received by Cape Lambert Resources from a number of major international trading groups; in a bid to enable it to quickly finalise a binding offtake agreement and committed funding package.
Since the appointment of MRM, discussions with several major international trading groups based in Switzerland, the United States and Europe have progressed.
These groups include those that had previously submitted indicative and non-binding offers of concentrate offtake and commodity-linked funding to the company and also a number of new trading groups identified by MRM that are seeking to secure the strategic supply of cobalt concentrates in the short term and have also indicated a willingness to support Cape Lambert Resource with a commodity linked debt funding structure.
This will allow Cape Lambert Resources to accelerate its advanced cobalt projects in Africa, including its joint venture interests in the Kipushi Cobalt Tailings and Kasombo Cobalt-Copper Projects in the Democratic Republic of Congo and the recently acquired Kitwe Cobalt-Copper Tailings Project in Zambia.
Under the terms of the engagement with MRM, the Cape Lambert Resources will pay a success fee in cash to MRM on first shipment under the proposed offtake agreement and on drawdown of any funding package secured by MRM. No equity is to be issued under the engagement to MRM.
MRM as the company’s strategic adviser has over the past several weeks worked with these groups on the proposed offtake agreement structure and commodity-linked debt funding structure and provided them with detailed indicative concentrate production schedules and concentrate specifications in order for these groups to provide detailed pricing and payment terms for the cobalt concentrate.
Concurrent with these discussions, Cape Lambert Resources has continued metallurgical test work in South Africa aimed at optimising the recovery and grades of the cobalt and copper concentrate from the Kipushi tailings.
As part of this process Cape Lambert Resources has agreed to provide a number of samples of the optimised bulk concentrate to the trading groups to allow them to finalise binding and firm commitments of cobalt offtake and related commodity-linked debt funding.
Potential construction partnership
Following a meeting of Cape Lambert Resources Chairman Tony Sage with senior executives of a major Chinese industrial group in Shanghai in
July 2017, representatives of the Chinese group will be visiting the company’s Kipushi cobalt project in August.
The group are reviewing the potential construction and funding of leaching technology to treat the Kipushi tailings in order to produce a high value cobalt hydroxide product and copper cathode that will be acquired for sale into the Chinese market.
Members of the board and Cape Lambert Resources technical team will join the representatives of the Chinese group on site in the DRC shortly.
“The progress that has been made by the company and our strategic advisers with these major international trading groups has been very pleasing, as has been the demand from these groups to receive samples of our proposed concentrate production,” says Sage.
“Finalisation of the offtake agreement and associated commodity-linked debt funding is a critical milestone for us and we need to ensure that we are securing the best possible terms for the company and its shareholders.
“Demand for cobalt continues to rise and pricing remains extremely robust and with our very advanced Kipushi cobalt project we are well placed to benefit both in the short and long term,” Sage concludes.