Strandline Resources Limited has taken another step towards bringing its 100 per cent owned Coburn mineral sands project in Western Australia into production, securing a binding offtake agreement as well as a Northern Australia Infrastructure Facility (NAIF) loan.
The agreement is with European-based Chilches Materials S.A. who provides products for the ceramics, glass, refractory and investment casting markets. The agreement means the project will supply approximately 7,000 tonnes per annum of the premium (finished) zircon product for the first five years of production.
The zircon sales covered by the Agreement are expected to generate approximately 6-8 per cent of Coburn’s forecast total revenue. The Agreement is subject to conditions precedent regarding the development of the Project.
As advised in April 2020, the company now has roughly 72 per cent of Coburn’s forecast revenue secured via binding offtake contracts.
The existing agreements have a forecast combined value of circa US$475m over five years, based on the pricing structures contained in the agreements and commodity price forecast assumptions contained in the Coburn updated Definitive Feasibility Study (DFS).
The remaining project revenue is expected to be from the balance of premium finished zircon and rutile product (representing approximately 28 per cent of forecast revenue). Offtake agreements for these remaining products are also reportedly advancing well.
Coburn’s forecast average annual production of premium finished zircon is 34,000 tonnes. The zircon quality has been confirmed as a ceramic-grade specification (containing +66 per cent ZrO2, good whiteness properties with low impurities) and will be used by Chilches in the production of high-quality ceramic opacifiers and in premium refractory applications.
The announcement follows the recent investment decision by the NAIF to provide a A$150 million loan facility for the development of the Coburn project.
The NAIF facility accounts for a major share of Coburn’s capital requirement of A$260 million (excluding financing costs). The company is now moving to finalise the balance of Coburn’s funding requirement.
Minister for Resources, Water and Northern Australia Keith Pitt said the project is expected to benefit the local region to the tune of $922 million over 25 years.
“[It] could create up to 315 jobs during the construction phase and up to 190 jobs during the operations phase,” Minister Pitt said.
Strandline Managing Director Luke Graham said the signing of another long-term offtake agreement with an industry leader provides further endorsement of Coburn and the high quality of its mineral sands products.
“With over 70 per cent of the project’s revenue now underwritten by binding sales contracts with major customers and a significant portion of the development funding secured via the NAIF loan, Strandline is advancing strongly towards development of this world-class project,” Mr Graham said.
About the Coburn mineral sands project
Coburn is situated in the low risk, mining-focused jurisdiction of Western Australia, 240 kilometres north of the established mineral sands export port of Geraldton.
Coburn is a world-scale mineral sands deposit, containing a rich zircon-titanium HM assemblage, with 20 Million tonnes (Mt) of in-situ HM, low slimes, low oversize and strong geological continuity across and along strike.
The Project straddles the eastern boundary of the Shark Bay World Heritage Property but all exploration to date has been to the east of the Shark Bay Property.
Some key features of the project include:
- Coburn is expected to provide significant socio-economic benefits, indigenous and local content opportunities.
- The project is construction-ready with key development approvals in place including mining lease, environmental approval, native title agreement and pastoral lease ownership.
- Average annual production of 34 kilotonnes (kt) premium zircon, 54kt of zircon concentrate, 110kt chloride ilmenite and 24kt rutile. It is also estimated to supply approx. 5 per cent of global zircon market and have a strong foothold in the Ti chloride feedstock market.
- Large homogenous JORC-compliant Reserve of 523 Mt at 1.11 per cent THM underpins an initial 22.5-year Life of Mine.
- Conventional open-pit dry mining in free-dig sand with progressive backfill and full rehabilitation.
- Low strip ratio averaging 0.7; extremely low slimes and oversize; coarse mineral particle size.
- First production of HMC within 18 months from project commencement.
- Scoping Study ‘Extension Case’ shows a potential mine life expansion to 37.5 years, increasing NPV8 to A$825m, through the conversion of Resources north of current Reserves.
- Construction contracts being awarded; final development decision as soon as possible during 2020.
- First production is expected within 18 months of the start of project construction.
For more information, please visit: http://www.strandline.com.au/irm/content/default.aspx