Suvo Strategic Minerals Ltd (ASX:SUV) welcomes a prepayment of around US$430,000 from its major Chinese kaolin customer ChaoZhou ChengCheng Industrial Co for about 900 tonnes of hydrous kaolin from the Pittong operations in Victoria.
This prepayment is part of a take or pay offtake agreement, marking a significant milestone in the second year of an ongoing agreement.
The deal stipulates a minimum order of 4,275 tonnes of hydrous kaolin over a three-year period.
In addition to the lab-scale work of the existing Pittong kaolin product suite, the two companies have kicked off research and development trials with Suvo’s hydrous kaolin for suitability in the ceramics market.
Highest production month at Pittong
Suvo interim CEO Bojan Bogunovic said: “We are pleased to receive this working capital injection from our valued customer, ChengCheng, who is looking to secure supply of our Pittong hydrous kaolin.
"October 2023 was the highest production month at Pittong since the acquisition by Suvo from Imerys S.A in 2021, and the prepayment comes at an opportune time.
"We are excited by the possible opportunity of increasing sales of our existing products, entering new markets and building on our 20-plus year relationship with ChengCheng.
"The ceramics industry represents roughly 50% of the entire kaolin market, sales of kaolin to this industry is not measured in thousands of tonnes but tens of thousands of tonnes.”
Further potential
More recently, Suvo has sent lab-scale samples for independent testing by ChengCheng’s customers for various applications, across a number of industries.
Importantly, the samples provided are Pittong products that are not currently purchased by ChengCheng or their customers.
Currently, the iron and titanium dioxide levels contained within the company’s hydrous kaolin are prohibitive for application in the ceramics industry.
ChengCheng has kicked off trials on Suvo’s kaolin with respect to iron and titanium dioxide removal and subsequent testing of the key parameters of product strength, plasticity and whiteness, all of which are important for application in ceramics.