Tantalum rally in 2017
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The tantalum that will be produced as a by-product of lithium mining in Bald Hill in Western Australia has found an offtaker.
This was announced today by Alliance Mineral Assets (AMA) and its 50-50 JV partner Tawana Resources, which said they have executed a non-binding in-principle term sheet with a "leading tantalum industry specialist".
The as-yet unidentified buyer has agreed to purchase a minimum of 600,000 pounds of tantalum concentrate in aggregate from April 2018 to 31 December 2020.
No offtake price was revealed but market prices have recovered strongly in the past year (see side story).
Demand has been driven by rising sales of smartphones and other electronic gadgets. Tantalum is used in the making of capacitors inside.
You can read more about the offtake deal in the press release here.
|The offtake agreement marks another big uplift in fortune for the Bald Hill Project which covers 774 sq km, which is slightly bigger than the size of Singapore (720 sq km).
As far back as the early 1970s, tantalum was mined at Bald Hill in minor ways.
Major exploration for tantalum started only in the 1980s and it was only in 2001 that proper mining began. However, it lasted until 2005 when the mine closed.
In 2009, the couple -- Tjandra Pramoko and Simone Suen -- who own Living Waters Mining bought the mine and subsequently sold it a year later to a company they incorporated, Alliance Mineral Assets (AMA).
The consideration: 31,999,999 shares at an issue price of A$0.50 per share and A$4,000,000 cash.
Refurbishment work on the mine plant was carried out with funds raised in several rounds from external investors.
In July 2014, AMA was listed on the Singapore Exchange at 23 Singapore cents a share with a market cap of S$90.6 million, raising net proceeds of S$7.7 million.
AMA had appointed Mitsubishi Corporation RtM Japan Ltd as a non-exclusive distributor of its processed tantalite concentrate in Asia.
"We delivered our first shipment of tantalum in December 2015, and by February 2016, prices were tanking. By April, they had collapsed to US$55 per pound, and went as low as US$50 per pound," Mr Pramoko recalled in this article.
Work ground to a halt.
AMA, in running through old exploration data of the mine site and commissioning metallurgical tests, found that the ore contained a high grade of lithium.
"Initially, we couldn't believe the results - how much lithium there was, and how high its quality was. If tantalum prices had not collapsed, we would not have found what we had. We're very blessed that we got the right address."
Fast forward to today: The Bald Hill project is well on the way to producing lithium and tantalum.
By way of value, the mine is currently worth about S$475 million based on the market caps of AMA (S$225 m) and TAW (A$250 m).
Post-script: On 29 Jan 2018, AMA and TAW announced the identity of the offtaker: HC Starck Group.