Here's why the Tombador (ASX:TI1) share price is rocketing 35% higher

The Tombador Iron Limited (ASX: TI1) share price is rocketing 35% higher to 10 cents on the back of a signed offtake agreement with Trafigura.

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The Tombador Iron Limited (ASX: TI1) share price is one of the best performers on the ASX market today. Its shares are rocketing 49% higher to 11 cents at the time of writing. This comes on the back of a signed offtake agreement with Trafigura.

Based in Singapore, Trafigura is one of the world's largest commodity trading houses. The company provides services to connect producers, processors, and consumers in the oil and petroleum, metals, and minerals markets.

Let's take a closer look at the agreement and what this means for the Trafigura share price. 

What's pushing the Tombador share price higher?

The Tombador share price is on the move today after announcing a lucrative partnership deal.

According to its release, the company advised it has executed a binding offtake agreement with Trafigura.

Under the agreement, Trafigura will purchase 100% of Tombador's high-grade iron ore that is mined and sold to the international export market. This does not include the separate sales that are made domestically to the Brazilian market.

While the release did not provide much information, Tombador stated that the contract terms include details in regards to the sale, shipment, delivery, and pricing for the iron ore. In addition, Trafigura will provide a pre-delivery partial payment to Tombador for support of the additional working capital.

The contract is valid for an initial minimum period of 3 years from when iron ore is first produced at the mine. Provided both parties are satisfised, the term of the deal will be renewed annually.

Quick take on Tombador

Formed in October, 2020, Tombador is an Australian miner that is focused on the development and retailing of iron ore. The company owns 100% of a world-class Tombador iron ore project, situated in the Bahia State in Brazil.

CEO commentary

Commenting on the partnership, Tombador CEO, Gabriel Oliva, said:

With production on track to commence in Q2 2021, we are delighted to have forged a relationship with a company of the calibre of Trafigura. This partnership provides certainty for sales and working capital support, ensuring a smooth entry to the international market once operations commence.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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