Alkane Resources Ltd (AX:ALK) has signed an exclusive worldwide marketing, sales and distribution agreement with UK based specialist chemicals firm, Minchem, for its entire annual DZP zirconium output. The agreement is valid for an initial five-year period (with an option to extend for a further five) from the start of production by mutual agreement. We consider this a major key de-risking event that should provide key assurances for project financing.
The Alkane-Minchem exclusive worldwide marketing and sales agreement covers all of the DZP’s planned annual zirconium production of 16,000t, which represents c A$100m-120m in project revenues per year based on current spot prices for the DZP’s suite of zirconium products (Alkane Resources price estimates). Minchem is a technical ceramics marketing and manufacturing business involved in zirconium chemicals and zirconium dioxide material. Its 40 years of experience and worldwide reach should give the DZP the technical and marketing expertise required to promote and sell its range of speciality zirconium and associated rare earth products. The sale of associated rare earth products relates to the rare earth oxides cerium oxide and praseodymium oxide, which are used to stabilise zirconia. Stabilised zirconium dioxide products are higher value and Minchem will promote their sale to, and provide technical support for, future customers.
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