A non-bonding Heads of Agreement (HoA) between Andromeda Metals Ltd (ASX:ADN) and Traxys Europe S.A., will see the pair pursue mutually beneficial business opportunities linked to the sale and purchase of Andromeda’s halloysite-kaolin products.
The agreement lays the groundwork for both companies to explore mutually advantageous business ventures and aims to target ceramic tile production and other related applications in specific geographical markets.
The HoA between Andromeda and Traxys is set to establish a comprehensive framework, designed to identify potential sales regions and to finalise the product validation and marketing strategies for targeted markets.
Additionally, the agreement includes a collaborative effort to explore various financing options, encompassing both equity and debt, to support Andromeda’s business initiatives.
“We are excited by the prospect of working with Traxys towards establishing a comprehensive strategic relationship," Andromeda chair Mick Wilkes said.
"The partnership has the potential to significantly de-risk The Great White Project in a number of areas, further supporting an anticipated final investment decision being made,”
“In selecting a long-term strategic partner, the board considered a number of key elements: trust, strategic alignment and establishing a broad and mutually beneficial relationship across multiple areas of Andromeda’s business.
“The prospect of partnering with Traxys delivers on these in spades! Access to Traxys’ deep network of trading and financing relationships in industrial minerals, has the potential to assist Andromeda in securing further binding offtake commitments, debt and trade financing, and cornerstone equity participation.”
Expanding footprint: Andromeda's partnership with Traxys
The strategic move by Andromeda could open several geographic doors.
Traxys, a prominent player in the physical commodity trading sector, specialises in metals and natural resources and operates with a robust workforce exceeding 450 employees, spread across more than 20 offices globally.
Traxys has established a significant presence in the industry, with an annual turnover exceeding US$10 billion.
Headquartered in Luxembourg, the company's expertise spans sourcing, trading, marketing and distributing a wide range of products, including non-ferrous metals, ferro-alloys, minerals, industrial raw materials and energy. This diverse portfolio underscores Traxys' capability in handling complex supply chain management and logistics operations in the global market.
The key terms for discussion between Andromeda and Traxys will include:
Direct sales of Great White CRMTM
- Targeting 20,000-30,000 wet metric tonnes (wmt) per annum for the first stage, and seeking to proportionally increase over subsequent stages, covering the potential geographies of Turkey, Middle East, Scandinavian countries and Latin America (LATAM);
- Targeting a term of five years, with first shipment during the first quarter of calendar year 2025 (Q1 2025); and
- Option for 60 or 90-day pre-shipment advances, for a portion of agreed target volumes during the first 24 months of production.
Direct sales Great White HRMTM
- Targeting 10,000-15,000 wmt per annum for the first stage, and seeking to proportionally increase over subsequent stages, covering the potential geographies of Europe, Middle-East and Africa (EMEA), India and the Persian Gulf region;
- End-user validation and homologation and certification for each market to be completed;
- Targeting a term of 5 years, with first shipment during Q1 2025; and
- Option for 60 or 90-day pre-shipment advances, for a portion of agreed target volumes during the first 24 months of production.
Potential equity and debt arrangements
- Participation in funding raises to support the company in the period until an anticipated Final Investment Decision (FID) is made; and
- Contribution towards funding requirements following an anticipated FID being made, including potentially as a cornerstone equity investment or via the provision of working capital facilities.
“We are excited about the opportunity a strategic partnership represents for Traxys, Andromeda and global kaolin markets,” Traxys CEO Mark Kristoff said.
“Our Industrial Minerals group has been involved in similar commodities on a global basis for over 20 years. This agreement supports us in deploying that capability into facilitating the planned development of The Great White Project and bringing its premium products to global markets.
“The established market for kaolin is currently valued at over $4 billion of sales per annum, which we expect to grow rapidly as demand for kaolin continues to rise while sources of high-quality kaolin are increasingly being depleted.”