Mineral Commodities Limited (ASX: MRC or the Company) and its empowerment partner, Blue Bantry Investments 255 (Pty) Ltd ('Blue Bantry'), are pleased to advise that they have entered into formal agreements ('GMA Agreements') for Offtake and Funding with Garnet International Resources Pty Ltd, a member of the GMA Group ('GMA Group') whereby: Mineral Sands Resources (Pty) Ltd ('MSR') agrees to supply GMA Group with finished garnet product in the following volumes: 2024-2025 - 80ktpa; 2026-2028 - 105ktpa and 2029-2033, subject to renewal at GMA's election - 125ktpa and GMA Group agrees to provide MSR with US$10,000,000 in loan funding, repayable over 5 years from 1 January 2024, on commercial terms to fund the design and construction of a Mineral Separation Plant ('MSP') in the Western Cape Region of South Africa.
The size and scope of the MSP in terms of capacityand product type (garnet, ilmenite, zircon or rutile) is at MSR's discretion, with a minimum garnet concentrate feed of 200ktpa the only specified requirement under the GMA Agreements. MSR intends for all garnet and ilmenite concentrate feedstock to be processed through the MSP.
MSR owns 100% of the Tormin Mineral Sands Operation in the Western Cape, South Africa. MRC recently entered into agreements to increase its interest in MSR and the Tormin mine from 50% to 69%1 , subject to the satisfaction of certain conditions precedent. GMA Group is the global leader in industrial garnet, providing the highest quality garnet abrasive to the waterjet cutting and protective coating industries2 . It has been MRC's longterm partner in garnet concentrates sales. Offtake Agreement pricing is agreed, subject to existing rise and fall mechanisms and is commercial in confidence. GMA also has first right of refusal on any finished garnet product produced in excess of the minimum offtake above
GMA Group's loan is to be secured against MSP and a guarantee provided by MRC. These agreements align with MRC's Strategic Plan3 to transition into higher value finished products, with the Company aiming to complete construction of the MSP by the December 2023 quarter. The Strategic Plan aims to maximise the value of MSR's mineral sands operations by maximising final product value through transitioning from mixed concentrates to finished garnet and ilmenite mineral products. The GMA Agreements support the third of the three key catalysts targeting returning Tormin to historical profitability4 (during years 2015-2021 Tormin produced an average EBITDA of US$16M) and improving cash flow generation, being
Inland Strands production (targeting processing 2.7Mtpa of ore, up from historical rates of circa 2.4Mtpa, and enables more sustainable beach mining grades), which has been completed and commissioned in the March 2023 quarter;
Third Primary Concentration Plant (targeting a further increase in ore processing from 2.7Mtpa to 3.9Mtpa), aimed for completion December quarter 2023 and MSP (anticipated that concentrate product produced from ore processing at 3.9Mtpa will then be transitioned into higher value finished products), aimed for production in March quarter 2024.
The Company's Interim Chief Executive Officer, Mr Adam Bick, commented: 'We are very pleased to finalise the GMA Agreements, crystallising our long-term partnership with GMA Group and Tormin's transition from concentrate to higher margin finished product sales. This Offtake Agreement forms the foundation of expanding our revenue base, profitability and cash flows at Tormin. To provide context, the Tormin operation produced 179kt of garnet concentrate in 2022, highlighting that this minimum offtake agreement will cover a significant portion of the available finished garnet produced from current operations. The GMA funding agreement also allows construction of an ilmenite MSP, with ilmenite finished product to be sold into the lucrative, well established finished ilmenite market. We welcome the opportunity to renew and formally extend our long-standing relationship with GMA and explore new opportunities to expand our mutually beneficial commercial interests.'
Contact:
Tel: +61 8 6373 8900
About Mineral Commodities Ltd
Mineral Commodities Ltd (ASX: MRC) is a global mining and development company with a primary focus on the development of high-grade mineral deposits within the industrial and critical minerals sectors. The Company is a leading producer of zircon, rutile, garnet, and ilmenite concentrates through its Tormin Mineral Sands Operation, located on the Western Cape of South Africa. The Company owns and operates the Skaland Graphite Operation in Norway, the world's highest-grade operating flake graphite mine and is the only producer in Europe. The planned development of the Munglinup Graphite Project, located in Western Australia, builds on the Skaland acquisition and is a further step toward an integrated, downstream value-adding strategy which ultimately aims to produce graphitic anode products and capitalise on the fast-growing demand for sustainably manufactured Lithium-Ion Batteries. In April 2022, the Company released its Five-Year Strategic Plan 2022-20265 to delineate and implement its aspiration to become a leading vertically integrated diversified producer of graphitic anode materials and value added mineral products with a commitment to operate with a focus on the Environment, Sustainability and Governance.
MINERAL COMMODITIES LTD 