After working some fiscal magic to post an annual EBITDA of US$21.3m for calendar 2020, ASX-listed Mineral Commodities has executed a number of agreements with offtake partner, GMA Group to lock in future sales of garnet concentrate from its Tormin mineral sands operation on South Africa’s Western Cape.
Whilst Mineral Commodities also produces zircon, ilmenite and rutile concentrate from Tormin’s high-grade deposits, the company said it was keen to reset its long-term relationship with its key garnet offtake partner.
Included amongst a suite of agreements executed with Garnet International Resources – a member of the GMA Group – is a three-year, non-exclusive arrangement to supply GMA with 100,000 tonnes of garnet concentrate per annum commencing this year.
According to the company, further automatic annual renewals are possible after the initial 3-year term, subject to certain conditions including price review/escalation mechanisms and a six-month termination notice period.
Under a separate agreement, the company said it will deliver around 635,000 tonnes of existing garnet product to GMA’s Saldanha facility to support GMA’s leading position as a global supplier of garnet abrasives.
As part of the wide-ranging deal, Mineral Commodities also committed to maintain an area at its Tormin mine site to stockpile GMA-owned garnet.
Mineral Commodities generated over 90 per cent of its 2020 revenues from its Tormin mineral sands project via the extraction of almost 2.4 million tonnes of heavy mineral-rich ore from its ground on South Africa’s west coast.
This offtake agreement with our long-term partner GMA forms the foundation of our revenue base at Tormin. GMA’s annual commitment represents 65% of our 2020 garnet production, underlining the importance of this partnership to our Company. We welcome the opportunity to renew and formally reset our long-standing relationship with GMA and explore new opportunities to expand our mutually beneficial commercial interests.
The company’s new arrangement comes off the back of the termination of a ‘life-of-mine’ garnet offtake agreement it had with GMA, as far back as September 2020.
Mineral Commodities said it will now focus on commissioning its Northern Beaches and Inland Strand mining operations on South Africa’s Western Cape.
At the start of 2021, the company’s Tormin Beaches deposit contained 1.13Mt at 13.67 per cent Total Heavy Minerals, or “THM” grade. The resource for its ‘placer-style’ Northern Beaches deposit stood at 3Mt grading an impressive 23.2 per cent THM.
However, the jewel in the crown in South Africa for Mineral Commodities could yet turn out to be its Western Strandline Deposit where it recently booked a massive total mineral resource of 106Mt grading 12.4 per cent THM. The company said 22.8Mt of Western Strandline’s resource lies within a recently expanded mining area and is available for immediate extraction.
Mineral Commodities now looks close to having all its South African ducks lined up in a row beside its Norwegian and Western Australian graphite projects. The picture coming into focus is of an integrated, downstream value-adding company growing in support of the lithium-ion battery supply chain.
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