Garnet offtake Adds Near A$20m to Mineral Commodities Treasury

ASX-listed Mineral Commodities has signed a three-year offtake agreement with industrial garnet abrasives manufacturer GMA Garnet Group over its Tormin mineral sands project, in South Africa.

Under the three-year deal, Mineral Commodities would provide a minimum of 150 000 t/y and a maximum of 240 000 t/y of garnet concentrate to GMA. The agreement provided Mineral Commodities the potential to add revenues of up to $20-million a year, depending on the exchange rate, as well as price assumptions and the garnet characteristics. The offtake agreement could be extended by a further two years.

"This is another important agreement for Tormin, in addition to our zircon/rutile agreement with Wogen, we are very satisfied with the agreement reached with GMA," said Mineral Commodities executive chairperson Mark Caruso.

He noted that the GMA agreement provided the company with certainty to the offtake for the garnet production over the mine life at Tormin. "The original metrics of this project did not take into account the upside resulting from garnet sales. One of the most significant aspects about Tormin is the extremely high grade and valuable assemblage of minerals which are processed through a simple, conventional and low-cost plant."

The A$16-million project was expected to have a mine-life of five years, and would produce some 48 000 t/y of zircon/rutile, 135 000 t/y of ilmenite and 240 000 t/y of garnet concentrate. Mineral Commodities told shareholders on Tuesday that the company had maintained the right to sell up to 60 000 t/y of garnet concentrate to third parties, at its discretion. Mineral sand production at Tormin started in December last year.--iAbrasive report