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Estrella Resources (ASX:ESR) has formed a “transformational” partnership with a leading Indonesian mining services company to boost the marketing and sales of limestone from its various concessions across Timor-Leste.
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Estrella has entered a Master Agreement with PT Raka Energi Mandiri, which will offer the latter exclusive marketing and offtake rights for the purchaser.
Sales targets for the partnership have been set at up to 500 million dry metric tonnes of limestone over five years from the first shipment, with Estrella Murak Rai Timor Lda (ESR 70%, MRT 30%) to earn the proceeds.
Successful facilitation of sales over this period will entitle REM to unlisted share options exercisable at five cents each.
Additionally, Estrella will – subject to shareholder approval – offer REM one unlisted share option exercisable at the same price for every tonne of limestone ordered and paid for, totalling up to 500 million unlisted share options exercisable at 0.5 cents each in the event REM achieves the sales target.
The agreement also opens the door to negotiation between the two companies for an offtake agreement to more fully document the terms upon which REM will have the exclusive right to purchase limestone.
Any deals on that front would also include the agreed annual sale price.
“This is a truly transformational moment for Estrella and a major step forward in building a long-term commercial pathway from limestone production from our Timor Leste projects, alongside our existing manganese exploration,” Estrella’s managing director, Chris Daws, said on the new deal.
“Partnering with a well-connected local group like REM gives us a strong advantage in accessing the Southeast Asian market.”
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“We anticipate this market to be advantageous for a number of years, given the substantial rise of nickel mining in Indonesia and limestone’s ability to improve the environmental impact of refining, primarily as an acid neutralisation agent.”
ESR shares have been trading at 3.8 cents.
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