Australia’s New Century Resources has signed another long-term offtake agreement for zinc concentrate to be produced at the Century mine.
The newest deal for the Century mine was signed with MRI Trading, a Swiss commodities trader based out of Zug that’s been operating for over 20 years.
New Century Resources has now secured a total of four offtake agreements for the mine, representing 75 percent of the company’s scheduled 1.5 million tonnes of zinc concentrate production for the first three and a half years of operation.
The agreement with MRI includes a US$15-million unsecured debt facility for use as general working capital for operations at Century, which is located 250 kilometers northwest of Mount Isa in Queensland.
The debt facility is structured as a prepayment for zinc concentrates to be delivered under the deal, with the period for delivery of concentrate or repayment being 120 days from drawdown, the company said. Drawdown on the debt facility is conditional upon the start of commercial production at the mine.
According to New Century, the tender process, which began in Q4 2017, received a lot of interest from zinc smelters and commodities traders alike, with 11 interested parties submitting indicative offers.
The Century mine is a past-producing mine that operated for 16 years up to 2016, when it was closed by China’s MMG (HKEX:1208) due to depleted reserves and low zinc prices.
According to New Century, this presented an opportunity for the company to take over the mine in 2017 as there were valuable remaining mineral assets.
“These include over 2,200,000 tonnes of zinc metal equivalent resources located within mineralised tailings, and over 1,000,000 tonnes of zinc and lead resources in the Silver King, South Block and East Fault Block base metal deposits. In addition, Century hosts several substantial phosphate deposits which are yet to be developed,” the company states on its website.
There’s more good news on the horizon for New Century as well, as it announced that terms and documentation for a fifth offtake agreement have also been finalized, with the signing of an agreement imminent.
On Monday, New Century Resources ended up 4.9 percent on the ASX at AU$1.285.
Update: Since this article has been published, New Century has announced its fifth offtake deal with trader Cancord Resources.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.