- NeuRizer (NRZ) finalises a binding offtake agreement with South Korean contractor Daelim worth $1.5 billion for urea fertiliser
- Under the initial five-year deal, Daelim will take 500,000 tonnes of granular urea per year from NRZ’s proposed namesake urea project in South Australia
- The contract value is $1.5 billion based on forecasted urea prices, providing a step towards construction by underpinning future revenue
- The agreement is subject to a number of conditions, mostly relating to the successful production of urea
- NeuRizer shares are up 13.9 per cent and trading at 20.5 cents at 11:31 am AEST
NeuRizer (NRZ) has finalised a binding offtake agreement worth $1.5 billion for urea fertiliser.
In November, under its previous name, Leigh Creek Energy, NRZ entered a heads of agreement (HoA) with South Korean contractor, Daelim.
The parties have agreed to move forward with the deal for 500,000 tonnes of granular urea per annum from NeuRizer’s proposed namesake urea project in South Australia.
The project is touted as “nationally significant” as it is set to deliver low-cost, high-quality nitrogen-based fertiliser for supply to local and export agriculture markets.
Initially, the project is pitted to produce one million tonnes of fertiliser per year, with the potential to increase to two million tonnes per year.
The five-year take or pay agreement further extends the relationship NeuRizer has with Daelim as its subsidiary was awarded the Engineering, Procurement, Construction and
Commissioning contract for NRZ’s Urea project in June 2021.
Daelim is also undertaking the front-end engineering and design study and bankable feasibility study for the project.
The contract value is $1.5 billion, based on forecasted urea prices by independent forecast team, CRU.
NRZ Managing Director Phil Staveley said finalising the agreement brings the project another step closer to production by underpinning future revenue.
“This guarantee to take up 50 per cent of the project’s initial yearly production allows both NRZ and Daelim to move confidently towards project construction,” he said.
“A further 50 per cent un-contracted urea supply allows us to remain agile to support domestic demand and take advantage of market pricing.”
While it is likely to be the only offtake agreement required to secure debt funding for construction, it does not preclude NeuRizer from entering into further offtake agreements if appropriate.
The agreement is also subject to certain conditions, including NeuRizer has securing all necessary infrastructure and facilities to enable the shipment of at least 84,000 tonnes product per month.
Additionally, if the board’s final investment decision is to not proceed with the project, the agreement will be terminated.
NeuRizer shares were up 13.9 per cent and trading at 20.5 cents at 11:31 am AEST.