Shares in Subiaco-based explorer TNG were up 20 per cent this morning, after the company announced it had signed a binding agreement with major Chinese steel-related raw material distributor Sinometal (Shanghai) Co., for its Northern Territory project.
The binding heads of agreement covers the off-take of up to 1 million tonnes of TNG’s Mount Peake magnetite concentrate, as well as the marketing of the concentrate with a focus towards Chinese customers Chengde Iron and Steel Group.
The deal also includes up to $5 million in pre-production financing in return for the subsequent delivery of cargo on favourable terms.
TNG said in an announcement today the deal completed its planned two-stage development for Mount Peake, and enhanced the potential to generate early cash-flow from the project.
It said a significant advantage of the alliance was that it allowed TNG’s product to be sold into a variety of markets and producers, while also securing a strong strategic foothold in China.
The company said it was at an advanced stage of a definitive feasibility study on the project.
TNG managing director Paul Burton said the agreement represented another milestone for the company.
“While there has been a short-term slowdown in the steel market in China, the fundamentals of the steel industry overall in that country remain extremely strong and the long-term demand outlook remains firm,” he said.
Mr Burton said the company was confident in its ability to sell its magnetite concentrate and that it would be well placed to maximise the value of the agreement.
TNG announced throughout the year agreements with strategic partners including WOOJIN, Posco, Global Pacific Partners and Hyundai Steel Co.
The partnerships will contribute to financing, development and long-term off-take for the Mount Peake project.
The company finalised a $5 million placement last month to fund the definitive feasibility study.
TNG shares were up by 4.7 per cent to 8.9 cents per share at 2pm WST.
