The company found a new customer…
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The King Island Scheelite Limited (ASX: KIS) share price ended the day in positive territory following a company announcement.
At market close, the mining company’s shares finished at 18.5 cents, up 5.71%.
New offtake agreement
According to the release, King Island Scheelite advised it has secured an offtake agreement with physical commodity trader and merchant, Traxys.
Under the deal, 90,000 metric tonne units (equivalent to 10 kilograms) of tungsten trioxide will be supplied annually from King Island Scheelite’s Dolphin Tungsten Project. Combined with the Wolfram agreement, this represents around 70% of the total annual production output from the mine.
King Island Scheelite noted that the agreement is for a total quantity of 330,000 units of tungsten trioxide. The processing plant has been commissioned and will operate until the order is completely fulfilled.
The price received each month for the concentrate will be dependent on market prices for Ammonium Para Tungstate (APT). Currently, APT is fetching for up to US$315 per metric unit tonne. The price has accelerated approximately 35% in 2021, despite COVID-19 impacts on the automotive and aviation sectors.
With the current price and exchange rates, the agreement translates to revenue of around $100 million for King Island Scheelite.
Previously, the company had entered into an agreement for tungsten trioxide with Kalon Resources, a wholly-owned subsidiary of Noble Group. However, certain financial milestones were not met, and a termination notice has been served. It is expected this will take effect on 10 November.
About the King Island Scheelite share price
Since the beginning of 2021, King Island Scheelite shares have risen 90%. Although, when factoring in the last 12 months, these gains extend to over 200% for investors.
The company’s share price reached an all-time high of 35.5 cents in March this year before profit-takers swopped in. And even with today’s higher price, its shares have continued to gradually slide lower over the longer-term.
King Island Scheelite presides a market capitalisation of roughly $77.7 million, with 408 million shares on its books.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.