Walkabout Resources has signed a formal binding offtake term sheet with Chinese expandable graphite producer, Inner Mongolia Qianxin Graphite (IMQG).

Executive chairman, Trevor Benson commented; “Signing the first binding offtake term sheet is a significant milestone for Walkabout Resources. It’s clear that end-users and upgrade facilities who have recognised our premium product, can now see a more definite timeline to production. This has prompted them to take action to secure supply from what is Africa’s standout large-flake graphite deposit.

“The agreement is the result of months of testwork and discussions and we are delighted to be able to make this announcement so quickly after releasing the upgraded Reserve and the improved DFS.

“Securing the sale of up to 50% of planned production also reduces financing risk. We look forward to being able to share updates with the market as we continue to advance discussion on both additional offtake agreements and financing,” he added

Key terms

The binding terms are to deliver a minimum of 10,000 tpa and a maximum of 20,000 tpa of flake graphite to IMQG for a period of three years following the commencement of production. A final off-take agreement shall replace the term sheet. Detailed terms of the agreement are commercially sensitive.

Although a framework for the pricing mechanism has been discussed, the final pricing agreement will only be agreed at a date, at least one month prior to delivery of the first batch of concentrate.

The actual amount above 10,000 tpa will also depend on the availability of adequate material in the soughtafter fractions. These mechanisms give Walkabout Resources flexibility in delivering excess product above the agreed minimum to other customers should demand result in improved prices at the time.

Walkabout Resources is developing the high-grade Lindi Jumbo Graphite Project in South East Tanzania to take advantage of forecast market conditions for large and jumbo flake graphite product.

Interest from end-users, upgrading facilities and traders in the Lindi Jumbo high grade-large flake products, and in the project remains very high with further advanced offtake discussions also progressing well.

Discussions and negotiations with the other holders of non-binding MoU’s and HoA’s continue with Walkabout Resources now in a stronger position to negotiate more favourable terms.