Zeotech (ASX:ZEO) has cemented its path to early cash flow with the completion of a previously announced five-year deal worth over $200 million with a large Chinese trading house.
The company has converted a binding term sheet inked in August with Jiangsu Mineral Sources International Trading Co (MSI) to a binding offtake agreement.
The agreement now provides MSI exclusive offtake and marketing rights for 950,000 tonnes of Zeotech’s direct shipping ore (DSO) kaolin products in China – including Taiwan and Hong Kong, as well as South Korea, and Japan.
DSO describes minerals that can be dug up, transported to port and loaded straight onto a ship without the need for processing.
Based on the committed volumes and year one pricing, the initial five-year agreement is valued at about $204 million, delivering an average net margin of more than 45% across the initial term. That equates to over $90 million in net earnings over the initial term.
Zeotech says the agreed volumes exceed the projected annual volumes relied upon in the company’s recent AusPozz™ Prefeasibility Study.
CEO James Marsh says partnering with MSI represents a major commercial milestone for the company.
“This agreement establishes Australia’s largest kaolin offtake and positions the company to generate early cash flows, which remain a key priority,” he says.
“The capital generated will provide a strong platform to advance the AusPozz™ Project and support our goal of contributing to the decarbonisation of concrete in the built environment.”
AusPozz™ is a high-reactivity metakaolin for use in low-carbon concrete, producing 79% less carbon emissions than ordinary Portland cement.
Earlier in September, Zeotech proved AusPozz™ could be deployed on a commercial scale.
The demonstration involved the pouring of about 100m3, the equivalent of 17 truckloads, using 8 tonnes of the AusPozz™ product, a high-performance and low-carbon supplementary cementitious material.
The AusPozz™ product has demonstrated the ability to enhance strength development and therefore reduce the total cementitious content of the concrete, which not only reduces embodied carbon, but also the overall cost per cubic metre.
Zeotech is working to fast-track approvals to mine the Toondoon Kaolin Project in Queensland, which has kaolinite content of over 90% in the ore clays making it ideal for kaolin DSO, cosmetic kaolin DSO and economic AusPozz™ production.
The emerging mineral processing technology company anticipates it will start mining at Toondoon in the first half of 2026, with key consultants and engineering partners already engaged.
Zeotech estimates it will cost about $7.6 million, excluding contingency, in the first two years of mining operations.
The company is investigating the potential to fund the $2.8 million required in the second year from the first year of operating cash flows.
Write to Angela East at Mining.com.au
Images: Zeotech
