Suvo Strategic Minerals Ltd (ASX:SUV) has signed a financially significant silica sand offtake agreement with BQ Nominees Pty Ltd trading as Barfold Quarry.
The three-year deal covers silica sand produced as a by-product of SUV’s Pittong Hydrous Kaolin Plant production in Victoria and is expected to generate revenue of between $1.5 million and $2 million.
Importantly, the sale and subsequent disposal of the silica sands represents a potential cost saving of $9 per tonne for Pittong’s kaolin operations, at which SUV may have been required to relocate and backfill the 180,000 tonnes of saleable silica sand.
Targeting kaolin sales in Asia Pacific
Suvo CEO and managing director Hugh Thomas expressed his satisfaction with the agreement, stating, "We are delighted to enter into this agreement with Barfold Quarry for the sale of our silica sand from Pittong."
He went on to say that the deal will result in "immediate free cashflow" and savings, which adds to funding from a $1.6 million recent placement.
Read: Suvo Strategic Minerals raises $1.6 million in placement; aims to boost hydrous kaolin sales in Asia Pacific
Thomas added that the company's prime focus remained on increasing sales of hydrous kaolin in the Asia Pacific region, in tandem with the expanded production capacity following the recent upgrade at Pittong.
Barfold Quarry is a basalt quarry and recycled concrete company. The company, which is now set to use Pittong silica sand in its premix concrete, currently operates three batching plants across Victoria and is constructing a fourth.
Barfold is expected to deploy its mobile equipment at Pittong in the coming weeks and begin dry screening of the existing silica sand stockpiles, incurring all associated processing, capital and haulage costs.