The Andromeda Metals Ltd (ASX: ADN) share price is surging today after the company secured a major off-take deal.
At the time of writing, the Andromeda Metals share price is up 20.93% to 26 cents.
What did Andromeda Metals announce?
The market is excited about Andromeda Metals' substantial binding offtake agreement with a large Chinese commodity trading house, Jiangsu Mineral Sources International Trading Co Ltd (MSI).
The signed offtake agreement will see Andromeda Metals supply MSI approximately 70,000tpa of its refined, ultra-bright, high-purity, kaolin material used for coatings and polymers for an initial term of 5 years. This product will be given the brand name "Great White PRM". The announcement highlighted the supply of Great White PRM will require some adjustments for Andromeda's mining schedule, processing plant design and transport requirements.
The company believes the offtake agreement with MSI "underpins the early years of the Great White Project as it represents a substantial proportion of the planned 116,000 tpa of refined halloysite-kaolin product."
From a pricing perspective, the contract also offers a significantly higher price than what was used in the company's pre-feasibility study, of A$700/tonne for ceramic grade material. However, the actual fixed contract price is omitted from this announcement, "at the request of the customer due to it being considered to be commercially sensitive information".
MSI will receive exclusivity in China for Andromeda Metals' PRM product for the duration of the contract, to allow it to market the product to end users.
Alongside the signed offtake agreement, the announcement advised that discussions are continuing with MSI for the supply of another product, its premium ceramic grade Great White CRM product under a separate agreement.
The Andromeda Metals share price in 2021
The Andromeda share price has struggled to push higher this year, facing a sharp 60% sell-off from 46 cents to 16 cents between 17 March and 5 May.
Despite the harsh sell-off, the exploration company has continued to push forward, recently announcing the commencement of aircore drilling at the Great White project and a $4 million research partnership to explore carbon dioxide capture through the use of halloysite nanotubes.
