The Andromeda Metals Limited (ASX: ADN) share price is lifting off on Monday amid a major announcement from the minerals exploration company.
Andromeda shares are currently trading 10.23% higher at 9.7 cents each after closing at 8.8 cents a share on Friday
Let's look into why investors are buying up Andromeda's stock today.
Image source: Getty Images
Why Andromeda shares are taking off today
The company announced another binding offtake agreement today, this time with Japanese porcelain manufacturer Plantan Yamada.
The multi-generational porcelain manufacturer will purchase 43,000 tonnes of Andromeda's semi-refined kaolin concentrate from its Great White Kaolin Project over the first three years of its operation.
Significantly, the binding agreement is for a price above Andromeda's feasibility study pricing.
The company's Managing Director James Marsh said it was an important milestone for the company:
This Agreement with a multi-generational leading Japanese porcelain producer [is] yet another significant milestone for Andromeda and the Great White Kaolin Project. It is the second binding agreement for our initial Great White KCM 90 product and provides excellent support for the strategic decision to start with this in Stage 1 of operations.
In July, the company signed an agreement with Asia Minerals Resources to supply 38,500 tons of halloysite-kaolin.
Andromeda also said it's in negotiations with other undisclosed partners to finalise additional strategic offtake agreements.
The company's Great White Kaolin Project is located in the Eyre Peninsula of South Australia with an estimated 34.6 metric tonnes worth of mineral resource deposits.
Andromeda Metals share price snapshot
Despite today's good news, the Andromeda share price is down 48% year to date and almost 40% over the last 12 months.
As such, the company's shares are significantly underperforming the S&P/ASX 300 Metals and Mining Index (ASX: XMM). It's dropped 3.62% year to date and 12% since this time last year.
However, it's been a good month for the company, with its shares gaining almost 30%. At the current share price, Andromeda's market capitalisation is $298 million.
