Almonty Resources (TSXV:AII) has announced it has entered into an additional 1-year fixed price off-take agreement for most of the production at its Los Santos mine.
As quoted in the press release:
The net price to be received under the contract is US$192.50 per MTU of contained tungsten, equating to an effective APT price of US$240 per MTU (assuming an industry average discount factor of 20% to the quoted price of an MTU of APT). The current average spot market price of APT is approximately US$200 per MTU. This contract is effective for all material shipped after February 1, 2017.
Almonty’s Chairman, President and CEO Lewis Black said: “Entering an additional fixed price contract for a significant portion of the production at our Los Santos mine further strengthens our view that the current market pricing mechanism for tungsten concentrate is becoming irrelevant and we are encouraged by the move towards a fixed price market environment at prices that make our operations profitable. Combined with our previous announcement on December 15, 2016 regarding the production of our Panasqueira mine, almost 75% of our 2017 total production has now been secured under various fixed price contracts. We anticipate that additional volumes from Almonty’s current and future production will evolve into fixed price contracts that are negotiated annually. We fully expect the rest of the industry to move to a negotiated fixed price contract environment due to the continued limited availability of tungsten concentrate in the spot market and the ongoing illiquidity of the current pricing mechanisms.”