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PROJECT UPDATE: Avanti Signs Moly Offtake Agreement with TKMetPro
Jun. 20, 2013 10:45AM PST
Avanti Mining announced today that it has signed an offtake agreement with Germany’s TKMetPro. The deal is potentially worth US$2.7 billion in revenue.
Exploration and development company Avanti Mining (TSXV:AVT) was in the news throughout March when its Kitsault molybdenum project received environmental approval from the BC government despite the Nisga’a Lisims Government’s disapproval.
Now, the company is making headlines again with the news that it has entered into an offtake agreement with Germany’s ThyssenKrupp Metallurgical Products (TKMetPro) for 50 percent of Kitsault’s molybdenum production over the course of the mine’s life.
The agreement gives TKMetPro, which operates in 80 countries and recorded sales of 40 billion euros last year, the right of first refusal for further molybdenum produced by Avanti at other projects when the agreement is in effect. Avanti has also made TKMetPro the exclusive agent for the sale of its products in Europe and North America; a specific amount will be sold in Germany.
At the price assumptions Avanti reported in its updated NI 43-101 feasibility study, released in February, the deal represents around US$2.7 billion of potential revenue.
A.J. Ali, Avanti’s chief financial officer, commented in the company’s press release, “[t]he TKMetPro agreement is an important step in securing Kitsault’s financing through the UFK program. We look forward to concluding our discussions with potential Asian partners for a similar transaction in order to assist in the completion of the debt financing for the project.”
As a result of the deal, Avanti has now been able to formally apply for an “Untied Loan Guarantee” from the German government. It hopes to receive “US$300 million of the total project finance facility needed for the development of the Kitsault mine.”
Shares of Avanti rose as high as $0.07 when the news was released earlier today; it is currently trading at $0.06.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Avanti Mining is a client of the Investing News Network. This article is not paid-for content.
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