Evolution Energy Minerals (ASX:EV1) has signed a binding offtake agreement with Yichang Xincheng Graphite Co Ltd (YXGC) for the sale of 30,000 tpa of coarse flake graphite from its Chilalo Graphite Project located in Tanzania for the first three years of operation.
Evolution and YXGC have worked closely together over a long period of time, with Chilalo’s graphite having been the subject of extensive product qualification with YXGC since 2015.
The product qualification work undertaken with YXGC demonstrated that Chilalo produces a premium quality coarse flake concentrate, which is suitable for the production of graphite foils, fire retardants and other high-value products such as bi-polar plates used in green hydrogen batteries.
Evolution Managing Director, Phil Hoskins, said YXGC are pioneering the use of graphite foil in green hydrogen batteries and Chilalo’s coarse flake graphite (comprising +100, +80, +50 and +32 mesh) provides ideal feedstock for these products.
“We are delighted to sign this cornerstone offtake agreement with YXGC, which significantly de-risks the project financing of our Chilalo Project,” Mr Hoskins said.
“The agreement is the culmination of a significant amount of work that we have undertaken with YXGC over many years and is testament to the strong relationship and mutual respect we enjoy with YXGC.
“YXGC is internationally renowned as a leading manufacturer of expandable graphite and high-value graphite products and the Company believes that its partnership with YXGC is critical to securing the finance for development of Chilalo.
“Furthermore, this offtake agreement is part of a broader collaboration to combine Chilalo’s high-quality product with YXGC’s industry-leading technology as part of a downstream operation to supply western customers with expandable graphite, graphite foil and a multitude of other high-value products.”
Evolution’s obligation is to supply 30,000 tonnes of graphite concentrate that is coarser than +100 mesh, the breakdown being commercial in confidence.
The market price of flake graphite concentrate under the Offtake Agreement is to be determined by the parties at least 30 days prior to the beginning of each quarter.
The Offtake Agreement is conditional on the following matters:
(1) Execution of a binding agreement with respect to the downstream JV in Europe as contemplated in the existing memorandum of understanding (MOU);
(2) Execution of a binding toll treatment agreement as contemplated by the MOU;
(3) Evolution notifying YXGC that it has obtained the necessary finance and commenced construction of the Chilalo Project before 31 December 2022;
(4) Commencement of production of graphite concentrate at the Chilalo Project before March 31, 2024; and
(5) Notifying YXGC that first delivery of graphite concentrate will occur on or before March31, 2024.
The company expects to complete a number of project finance related milestones over the coming months, including:
· Sales arrangements for fine flake product from Chilalo for use in the manufacture of battery anodes – the company is progressing discussions with several parties regarding the sales arrangements for its fines (-100 mesh) product, which represents approximately 35% of Chilalo production, and looks forward to updating the market in due course;
· A framework agreement with the Government of Tanzania to provide fiscal and regulatory certainty for the development of Chilalo;
· The appointment of project finance advisors; and
· An updated definitive feasibility study.
For further information please visit: https://evolutionenergyminerals.com.au/