Suvo Strategic Minerals Ltd (ASX:SUV) has executed a ‘take or pay’ offtake agreement with Chaozhou Chengcheng Industrial Co Ltd for its hydrous kaolin valued between $3.25 million to $3.5 million.
The agreement covers a minimum order quantity of 4,275 tonnes of hydrous kaolin over a three-year period.
Notably, the kaolin supplied under the agreement will be primarily used in the inks and pharmaceutical sectors, attracting a premium price in the market.
Under the terms of the contract, Chaozhou must either pre-pay for the goods upon issuance of a purchase order to Suvo or by draw-down by Suvo via a letter of credit.
Additionally, a second legally binding supply contract has also been executed with C&D Logistics for the delivery of an additional 80 tonnes of hydrous kaolin product from the Pittong Project to be further used in the next round of commercial-scale trials.
Looking ahead, Pittong is expected to produce around 50,000 tonnes per annum of hydrous kaolin and is forecast for completion in the March quarter of 2023.
“Premium hydrous kaolin product set”
Suvo executive chairman Henk Ludik said: “We are pleased to provide confirmation that the upgrade and optimisation of the Pittong operations is on budget and on schedule for commissioning in Q1 CY23.
“The commissioning date is aligned to the ongoing increase in off-takes for our premium hydrous kaolin product set.
“Both the new contract with Chaozhou and the expanded trial contract with C&D supports Suvo’s commitment to sell new volumes from the upgraded operations into the premium market. “
Pittong plant upgrade and optimisation
Suvo completed the Pittong plant upgrade and optimisation review in late August this year.
The independent review confirmed the plant capacity expansion will be capable of delivering a nameplate processing capacity of about 60,000 tonnes per annum under certain operating conditions, with a forecast completion date of March quarter of 2023.
At completion, Pittong is expected to produce around 50,000 tonnes per annum of hydrous kaolin, which represents an 83% utilisation, based on the company’s proposed operating hours.
Suvo has also made key management-level appointments on-site and is continuing an aggressive recruitment strategy to fill the remaining roles and ensure the plant is capable of operating 24/7, which is a condition required to achieve the nameplate processing capacity.
Green cement initiatives
Suvo is expecting to conclude the current scoping study with Calix for the production of metakaolin to be used in 'Green Cement'.
The cement industry is the single largest industrial polluter on the planet, accounting for 8% of all global emissions.
Notably, metakaolin can reduce the carbon footprint of cement by up to 40%.
Suvo is looking more closely at this decarbonisation strategy and the role it can play in advancing these initiatives with metakaolin but also with various additional materials.
A number of potential commercial opportunities to test carbon-reduced concrete have been presented and the company looks forward to updating the market as these are progressed.