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Neometals seals offtake deal with Chinese titanium player

Updated: Apr 23

Neometals has struck a deal with a buyer for its titanium. Credit: File

Neometals has struck a binding take-or-pay offtake agreement, via its wholly-owned subsidiary Australian Titanium, with Chinese partner Jiuxing Titanium Materials for both direct shipping ore (DSO) and titanium-rich mixed gravity concentrates (MGC).

The company says it now plans to update a recent pre-feasibility study to reflect the potential for a lower-capital development of its Barrambie titanium and vanadium project near Sandstone in Western Australia’s Murchison region.

The deal is for five years from the date of the first commercial-scale production of DSO. It includes an initial 12 months earmarked for the selling and purchasing of DSO and a subsequent 48 months for the sale and purchase of MGC. Neometals has agreed to supply a minimum of one million wet tonnes of DSO each year and 800,000 wet tonnes per annum of MGC.

This sets the foundation for a fast-tracked, lower capital development and offtake solution for our Barrambie project. Jiuxing has demonstrated its commitment to formalising what will be one of the world’s largest titanium mineral Offtake Agreements. The proposed market linked pricing and floor price mechanisms provide downside protection, margin insulation and upside exposure, making a compelling case for the standalone development of Barrambie. Neometals managing director Chris Reed

Both companies have eight weeks to ratify the agreed terms of the deal via board approval in order to finalise the agreement.

Neometals management believes that despite the state of the global economy and financial markets, demand and pricing for titanium feedstocks is strong and will continue to outpace supply growth for the foreseeable future. And it is a view which appears to have sound reasoning.

A recent report by Global Market Insights predicted the world’s titanium powder market value will reach US$4.5 billion (AU$6.7 billion) by 2032. The bullish predictions are largely due to the commodity’s growing use in both the automotive and aerospace sectors.

In the past few years, the rising disposable incomes and higher consumer spending capacities across developing and developed regions has impacted on the style of car being demanded and manufactured. The rapid integration of smart technologies, a growing consumer preference for luxury cars and the ongoing innovation in the field of autonomous vehicles look set to spur the demand for titanium powders in automotive applications.

Neometals holds a massive, near-surface 280 million tonne resource at Barrambie, grading 9.18 per cent titanium oxide and 0.44 per cent vanadium pentoxide and positioning the specialty-metal deposit as one of the world’s biggest undeveloped titanium resources. The deposit is a titanium-vanadium-rich magnetite body hosted within a suite of intrusive mafic rocks.

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