Arcadia Minerals (ASX:AM7) reports it has received a letter of intent (LOI) from Chinese multinational HeBei Xinjian Construction CC to negotiate and potentially enter into an offtake agreement for the Swanson Tantalum and Lithium Project in Namibia.
The company says possible agreement with HeBei could see an evergreen offtake of tantalum pentoxide concentrate with a minimum of 25% metal content and Li2O with a minimum 1% Li2O metal content be granted to HeBei.
It also states as part of the potential agreement, HeBei will provide funding to commission and construct a tantalum multi-gravity-separation (MGS) concentrate plant and a lithium concentrate plant through dense media separation or floatation in return for sharing in the profit of the operations.
Arcadia Minerals Executive Chairman Jurie Wessels said: “The receipt of the letter of intent from a company of a calibre such as the HeBei Xinjian Construction CC validates our confidence in the Swanson Project becoming a potential early cash generator.
We are particularly emboldened by the expression of intent to conduct a profit sharing arrangement aimed at both the tantalum and lithium credits of the Swanson Project and to purchase both product streams.
“Our next steps are to engage with HeBei and other suitors through negotiation to possibly conclude a transaction as early as is reasonably possible”
Our next steps are to engage with HeBei and other suitors through negotiation to possibly conclude a transaction as early as is reasonably possible.
HeBei recently concluded a deal with our neighbour Kazera Global under similar arrangements, demonstrating the interest for our products.
Interest from various parties has also extended to the Bitterwasser Lithium Clay and Brines Project, further validating the potential of the company’s assets, however at this stage these discussions remain ongoing and incomplete.”
Arcadia reports the proposed transaction relates only to ore mined from the Swanson Project located in, on or under mining licence ML223 in the Karas Region of the Republic of Namibia.
The aim is to commence with exploiting the existing mineral resource at Swanson which consists of an indicated mineral resource of 1,439 million tonnes at an average grade of 498ppm Ta2O5, 72ppm Nb2O5 and 0.14% Li2O, and an inferred resource of 1,145 million tonnes at an average grade of 472ppm Ta2O5, 75ppm Nb2O5 and 0.17% Li2O.
The D1 Pegmatite is expected to be the focus for the purpose of lithium production as the company says it contains the ‘highest’ lithium grade with a total mineral resource of 573 million tonnes at an average grade of 349ppm Ta2O5, 95ppm Nb2O5 and 0.38% Li2O.
Arcadia states feedstock for the MGS Plant is to consist of run of mine ore from the E to F and D Pegmatites, and any other potential JORC reserves declared from pegmatites over ML223, and the feedstock for the Lithium Plant is to consist of lithium-containing waste derived from the MGS Plant.
The company predicts that saleable product is to consist of concentrate and semi-beneficiated ore derived from minerals mined and processed at ML223 and will consist of tantalum pentoxide in concentrate with a minimum metal content of 25% and lithium oxide as a concentrate with a minimum grade of 1% Li2O metal content.
Pricing for the tantalum product is anticipated to consist of the quoted price by Argus Media Group for 25% minimum Ta2O5 adjusted for delivery at mine gate, and the pricing for the lithium product is foreseen to be benchmarked by the quoted price by Fast Markets for a minimum of 5% Li2O concentrate adjusted to a minimum of 5% Li2O and delivered at mine gate.
Arcadia reports payments will be conducted on a monthly basis or in accordance with other quotation periods as may be agreed, within 7 days of delivery secured by an irrevocable letter of credit issued at Incoterms by a major Namibian banking institution.
It also notes no right of rejection of product will exist and no penalties will be charged, and instead a price variation pro-rata specified content will be conducted over an agreed sliding scale.
Delivery of the product is to occur in accordance with a quarterly quotation period, or as is agreed to between the parties in 1 million tonne bags for tantalum product in shipping containers at Incoterms with the point of delivery at mine gate in accordance with TIC Transport Policies.
Lithium Product delivery will also occur in 1 million tonne bags as crushed material to over 1mm provided for removal from at mine gate at Incoterms and TIC Transport policies.
Arcadia reports the transaction is proposed to commence at the signing of a binding agreement or at the fulfilment of conditions precedent, none of which are currently foreseen as parties may agree, and it will continue until ML223 is lawfully terminated or the project becomes permanently uneconomical.
The company intends to immediately enter negotiations with HeBei to finalise a potential transaction during the first quarter of 2023.
HeBei Xinjian Construction CC was established in 2013 in Namibia to provide ‘quality’ and ‘cost-effective’ construction services to its customers. It’s parent company HeBei Xinjian Construction Group was founded in 1952 and conducted business in housing construction, decoration, industrial and civil equipment, installation, plumbing, electrical and instrument installation, real estate development, overseas project contracting, labour export and import as well as export trading.
Arcadia Minerals is a Namibia-focused diversified metals exploration company based in Guernsey exploring for a suite of gold and ‘new-era’ metals including lithium, tantalum, palladium, nickel and copper.
Its projects include the Bitterwasser Lithium in Clay and Brine Project, the Kum Kum Project, the Karibib Project and the Swanson Project.
Images: iStock
