- VBX and the Chinese Group to negotiate on non-exclusive basis
- Chinese Group may provide investment for VBX to develop and operate a bauxite mining and export operation
- Offtaker may purchase Wuudagu bauxite product
- Companies to collaborate on exploration, development and operation of bauxite projects in Northern Australia
VBX (ASX: VBX) has reached a bauxite offtake and investment framework agreement with a Hong Kong subsidiary of a major Chinese aluminium industry group.
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The agreement is initially focused on development of the Wuudagu bauxite project in northern Western Australia but may be expanded to explore other local project opportunities.
MD, Ryan de Franck, said the purchase side of the deal is focused on a mutually agreed amount of Wuudagu bauxite product, anticipated to be between two and three million tonnes per annum (Mtpa).
“Wuudagu’s attractive low-silica product quality, short and efficient logistics, expanding scale and northern Australian location are highly desirable attributes for a bauxite supply source in the global aluminium industry,” Mr de Franck said.
“VBX has made a conscious decision to retain all rights to future products produced at Wuudagu and to seek to use these rights to provide an attractive funding solution to construct and commission the project.
“This framework agreement with a major Chinese aluminium industry group provides a pathway to finalising a material funding solution for Wuudagu once the DFS is completed. We look forward to working collaboratively with the Chinese group to define the investment and offtake terms once the results of the DFS are available.”
VBX is now aiming to complete a definitive feasibility study (DFS), obtain all relevant approvals and licences and develop and operate a bauxite mining and export operation at Wuudagu.
It and the Chinese Group will use commercially reasonable endeavours to negotiate on a non-exclusive basis, the terms on which the Chinese group may provide investment for VBX to establish a mining operation at Wuudagu.
Subject to the negotiation and completion of the mining operation investment on mutually acceptable terms VBX and the Chinese group will potentially negotiate collaboration on the exploration, development and operation of other bauxite projects located in Northern Australia, including VBX’s Takapinga bauxite project located in the Northern Territory, through potential investment, product offtake and/or advance payment arrangements.
The Chinese Group’s mining operations investment is intended to cover a material component of the cost of constructing and commissioning a mining operation at Wuudagu with the investment amount determined based on the results of the DFS and by mutual agreement.
Wuudagu is located in the Shire of Wyndham East Kimberley, in the north Kimberley region of WA and approximately 270km north-west of Kununurra.
VBX was down 8.93% to 51.0¢. Mkt cap $46.53M.
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