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- Elmore (ELE), through its subsidiary Peko, signs an ore sales agreement with Hong Kong’s Royal Advance for magnetite from the recently-purchased Peko project in the NT
- According to Elmore, Royal Advance is interested in buying all of the product produced over the life of the mine
- However, the parties have decided to take a conservative approach, and the initial offtake deal will cover the first two shipments with the option to extend out to 12 months
- The first production at Peko is averaging a grade of 66 per cent iron, and Elmore says it hopes its relationship with Royal Advance will extend beyond magnetite to other minerals
- ELE shares were up 6 per cent and trading at 3.5 cents at 2:01 pm AEST
Elmore (ELE) subsidiary Peko has struck an ore sales agreement with Hong Kong-based Royal Advance to ship high-iron concentrate magnetite product to China.
The offtake deal comes just days after Elmore purchased the Peko iron project in the Northern Territory.
The average grade of the product to date sits around 66 per cent iron, though Elmore said it expected the grade could be lifted to as high as 67 per cent. This higher grade of iron concentrate sells for significantly higher than the average iron ore price.
The sale price on the offtake deal, however, will be based on the PLATTS 65 per cent Iron index, minus one per cent.
Any higher grades of iron will also sell for the equivalent higher price.
Elmore said while Royal Advance was interested in taking all of the ore produced over the life of the mine, both companies were adopting a “conservative approach” until production and product quality had been better established.
As such, the current offtake deal will cover the first two shipments from the project, and Peko has the option to extend it out to 12 months.
Payments for the ore will be made across three tranches. The first 40 per cent will be received once 7500 tonnes of product have been stored at Darwin Port. Then, 55 per cent will be received once the product is loaded onto a ship. The final 5 per cent will be received once the quality of the product is confirmed after shipment.
Elmore said it had produced “more product than is required” for the initial storage phase at Darwin Port. However, a lack of sea containers slowed the product down from getting to Darwin.
Additional containers have now been found and are making their way through Queensland to the project.
ELE shares were up 6 per cent and trading at 3.5 cents at 2:01 pm AEST.
