Tanzania-focused mineral sands developer Strandline Resources has signed a binding sales contract for 100% of the ilmenite to be produced over the life of mine at the Fungoni minerals sands project currently under development in Tanzania.
Tanzania – Strandline Resources signed the binding sales agreement with China’s Maoming Ubridge Group Mineral Industry Company.
Based on the pricing formulae contained in the agreement, the ilmenite production is expected to generate 28% of Fungoni’s total revenue.
With the previously announced zircon-monazite sales agreement with Hainan Wensheng High-Tech Materials Company, Standline Resources now has 90% of Fungoni’s forecast revenue secured via binding offtake contracts.
Fungoni’s high unit value orebody assemblage and low costs underpin strong financial returns for the mineral sands hopeful, with a fast payback period of 2.7 years from the start of construction and a first quartile revenue-to-cost ratio of 2.7.
“Establishing this strategic offtake relationship with Maoming represents another important milestone for Strandline, ensuring the company remains on track to commercialise what is the first in its pipeline of outstanding mineral sands assets in Tanzania,” says Strandline Resources MD Luke Graham.
“The agreement provides a strong endorsement of the Fungoni project and the high quality of the chloride ilmenite which will be produced over the life of the mine.
“With the environment certificate already received for the project, the company is now awaiting approval of its mining licence from the Tanzanian Mining Commission, at which time project funding can be finalised,” says Graham.
Fungoni project snapshot
The Fungoni DFS, which was completed in October 2017, confirms the project will deliver strong financial returns, has a high unit value product suite, is capital-efficient and demonstrates the strategic potential of the Company’s portfolio of mineral sands assets in Tanzania.
The project is located ~25km from the Dar es Salaam port in a growing commercial and industrial district and will benefit from existing infrastructure in the region.
The project is ideally positioned to benefit from an improving mineral sands outlook and in particular, the emerging zircon structural supply gap forecast to emerge this year. The zircon and ilmenite pricing formulae is leveraged to the improving market conditions.