- Black Rock Mining (BKT) opens green after striking binding offtake deals with two existing Chinese customers
- The deals with Taihe Soar Supply Chain Management and Qingdai Yujinxi New Material Co were initially struck back in 2019
- These deals were first agreed in the form of Pricing and Volume Agreements; Black Rock says they’ve now been converted to binding offtake status
- The new binding term sheets revise Black Rock’s product allocation to separately reserve 100 per cent of fines for investee business POSCO
- Shares in Black Rock opened 8 per cent higher at 18 cents each this morning
Graphite miner Black Rock Mining (BKT) has opened green today after striking binding offtake deals with two existing Chinese customers.
The company signed the offtake deals with Taihe Soar Supply Chain Management and Qingdao Yujinxi New Material Co.
Black Rock first struck offtake deals with the Chinese businesses back in 2019, but today said these deals were initially agreed in the form of Pricing and Volume Agreements.
Now, the company says these arrangements have been converted to binding offtake deals for the supply of large flake graphite concentrate from Black Rock’s Tanzanian mining operations.
Under the first deal, Taihe Soar has agreed to buy 20,000 tonnes of Black Rock concentrate per year for three years. The buyer has the option to buy an extra 10,000 tonnes, uncontracted, and to extend the timeframe of the deal by two years.
The price of the graphite will be based on key global indexes RefWin and ICC Sino.
The Taihe Soar deal also comes with a prepayment of US$3 million (A$4.09 million).
Under the second deal, Qingdao has agreed to buy 10,000 tonnes of concentrate per year, also based on the index prices, with an optional extra uncontracted 5000 tonnes.
The Qingdao deal also lasts for three years with an option to extend it for an extra two years, and the agreement comes with a US$2 million (A$2.73 million) prepayment.
Black Rock Managing Director and CEO John de Vries said converting the company’s previous offtake agreements to a binding status gives the company a higher level of confidence in its business model.
“The company has been progressing these offtake agreements in parallel to activities with respect to resolving the Tanzanian Government’s Free Carried Interest provisions,” Mr de Vries said.
“We continue to receive strong offtake interest for large flake concentrate, subject to the ability to complete qualification.”
Importantly, the new binding term sheets revise Black Rock’s product allocation to separately reserve 100 per cent of fines for investee business POSCO.
Black Rock and Korean steelmaker POSCO signed the investment agreement back in February this year, under which POSCO agreed to invest US$7.5 million (A$10.22 million) to acquire a 15 per cent interest in Black Rock.
The investment deal came with a potential offtake agreement which the two businesses are continuing to negotiate.
Shares in Black Rock opened 8 per cent higher at 18 cents each this morning. The company has a $136 million market cap.