Malawi Mining Company (MMC) says Globe Metals and Mining’s move to secure 100 percent off-take agreement for its niobium with a Canadian firm means that all advanced mining projects have prospective buyers, providing market assurance.
MMC chief executive officer Leonard Kalindekafe said this in an interview on Monday following the signing of the agreement to enable a Canadian-based Neo Performance Incorporated the right to buy 150 metric tonnes (MT) per annum of Kanyika’s niobium phase one production.
In the company’s update on Monday, Globe Metals and Mining said the agreement provides a framework for the two firms to negotiate a binding off-take agreement for the supply of around 50 percent of the 313MT of the mine’s total annual phase one production of the high-purity niobium.
“The development of the Kanyika Project positions Globe Metals and Mining as a key and reliable supplier of in-demand niobium oxide to specialised industries based in Europe and North America,” reads the update in part.
According to the agreement, Neo Performance Incorporated, manufacturers of critical industrial materials for modern technologies, will have a right of first refusal to purchase tantalum pentoxide and zirconium on terms and conditions to be agreed upon by the parties.
Globe Metals and Mining chief executive officer Paul Smith is quoted in the update as having said that after securing 100 percent non-binding off-take intent letters, the company will now work on turning the agreement binding ahead of the project’s bankable feasibility study.
“We are now working to quickly turn these off-take discussions towards binding agreements,” he said.
Smith said these off-take discussions will now also be incorporated into the upcoming updated bankable feasibility study.
Neo Performance Incorporated chief executive officer Rahim Suleman said: “We are laser-focused on diversifying and de-risking our supply chain, including our long-term access to critical metals, and expanding into increasingly more downstream value-added applications across all our business lines, including niobium.”
On his part, Kalindekafe said all advanced mining projects owned by Mkango Resources Limited at Songwe Hill Rare Earth project in Phalombe, Lotus Resources’ Kayelekera Uranium Mine in Karonga and Lindian Resources’ Kangankunde Rare Earth Projects have all all secured off-take deals with US companies.
He said the development is a guarantee that Kanyika Niobium Project has significant value and is assured a market which is vital for the country’s mining sector.
Kalindekafe said: “In mining and project financing, an off-taker is a party that agrees to purchase the goods or services produced by a project. An off-take agreement provides a guaranteed market for the outputs of the project.
“This is good for project financiers because it reduces project risk.”
In a separate interview, geologist and mining consultant Ignatius Kamwanje said the agreement is meant to help funding for the project’s bankable feasibility study.
“I believe this is meant to secure support for its bankable feasibility study,” he said.
On September 2 2024, Globe Metals also signed a letter of intent with Affilips N.V. based in the Flanders for up to 100MT of refined high purity niobium pentoxide for the Kanyika project.
Kanyika Niobium Mine has the potential to become the first new globally significant niobium mine in 50 years, with an average production of 3 267MT per year of niobium pentoxide and 136MT per year of tantalum pentoxide over 27-year mine lifespan.
Apart from Globe Metals, Lotus Resources and Lindian Resources also signed off-take agreements of 600 000 pounds (about 272 000 kilogrammes) of uranium and 45 000MT rare earths respectively with US firms.
Government has Mining Development Agreements with Globe Metals, Lotus and Mkango Resources, with the latter two signed last year in which the Malawi Government has a 15 percent stake in Lotus and 10 percent in Mkango Resources through Lancaster Exploration.
Apart from the disparity in the non-diluting equity interest holding, the two deals are largely similar with key components being five percent royalty of gross revenue, 30 percent corporate tax rate, 10 years stability period, 10 years tax loss carry forward and community development expenditure allowable tax deduction.
