Australian Mines has reaffirmed its stance towards an offtake agreement with SK Innovation for product from the Sconi project.
Australian Mines (ASX:AUZ) released a statement on Thursday (January 3) to reaffirm its stance towards an offtake agreement with SK Innovation (KRX:096770) for cobalt sulfate and nickel sulfate from Australian Mines’ Sconi project.
The binding offtake agreement, announced in February 2018, entails SK buying 100 percent of cobalt sulfate and nickel sulfate set to be produced from Sconi. The flagship project, a cobalt-nickel-scandium operation in North Queensland, recently saw the release of a bankable feasibility study (BFS) in November 2018.
According to the statement, media speculation surrounding the offtake agreement had led the companies to provide shareholders with an update. The company reiterated that both parties “remain fully committed” to the agreement, and that senior staff members are continuing to collaborate with a goal of finalizing and executing the agreement during the current quarter.
One of the conditions of the original agreement announced in February was the company obtaining financing for Sconi’s development and construction before the end of 2018, with a caveat of a later date being acceptable should both companies agree to it.
In the Thursday update, Australian Mines stated that the companies had mutually agreed to extend finalizing the financing package to September 19, 2019. According to the statement, the extension is “designed to accommodate” the North Australian Infrastructure Facility’s due diligence and investigation into the possibility of providing financial support for Sconi.
“The fact we are able to work with SK Innovation to agree to a new deadline of September 2019 for financing without any resistance or renegotiation of other terms is evidence of the collaborative relationship we continue to enjoy with the Korean electric vehicle battery manufacturer and their support of Sconi’s future development,” Australian Mines Managing Director Benjamin Bell said in a statement.
Bell added that the company appreciated the extension, but felt that with the progress of negotiations since the release of the BFS, the company expected to have an entire project funding package in place by 2019’s second quarter.
Australian Mines’ share price remained stagnant at the end of ASX trading on Thursday (January 3), closing the day at AU$0.038 per stock.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.