Australian mining company Larvotto Resources has signed an offtake agreement with one of the world’s largest commodity traders. The deal with Glencore covers the first seven years of production from the Hillgrove project and secures a stable sales channel for the operation’s future gold concentrate output.
The agreement was signed on Tuesday and applies to the Hillgrove project in New South Wales, which is wholly owned by Larvotto. Under the terms of the contract, approximately 15,000 dry metric tonnes of gold concentrate will be supplied annually. The arrangement is structured on a mine-gate basis, meaning that Glencore will assume responsibility for logistics from the mine site to the end customer.
Larvotto Managing Director Ron Heeks described the agreement as a significant milestone in the company’s transition from project development to commercial production. According to Heeks, strong interest from leading commodity trading houses was expected given the current strength of global gold prices.
The Glencore agreement completes a key component of Larvotto’s marketing strategy. Earlier, the company secured an offtake arrangement with Wogen Resources for antimony concentrate. With both major products from Hillgrove now covered by long-term sales agreements, the project’s commercial foundation has been significantly strengthened.
Hillgrove continues to demonstrate additional growth potential. Last year, metallurgical testing achieved 90% tungsten recovery while increasing feed grades by a factor of sixteen. The results indicate that commercial tungsten concentrate could be produced using relatively simple and cost-effective processing methods. Heeks confirmed that testing is continuing and that discussions regarding future tungsten concentrate sales will begin as the project advances.
The first production from Hillgrove remains on schedule and within budget. Commissioning of the operation is planned for August this year. Larvotto shares were unchanged in Tuesday trading. The company currently has a market capitalization of A$690.3 million, equivalent to approximately US$485 million.
The partnership with Glencore provides Larvotto with a solid foundation as it prepares to begin production. Securing a guaranteed sales outlet for seven years reduces commercial risk and allows management to focus on delivering the project on time.
Source: MINING.COM
Image: Larvotto Resources
