Andromeda Metals jumps on inking key five-year offtake agreement with global customer for Great White kaolin

Andromeda Metals Ltd (ASX:ADN) has inked an offtake agreement with a major Chinese commodity trading house for kaolin produced at the Great White Kaolin Project JV with Minotaur Exploration Ltd (ASX:MEP). Under the binding deal, Jiangsu Mineral Sources International Trading Co Ltd (MSI) will take around 70,000 tonnes of refined, ultra-bright, high-purity kaolin from the South Australian project every year for the next five years. MSI will use the kaolin in the coatings and polymers market, branded as ‘Great White PRM’. The deal triggered a significant jump in ADN’s share price, with company stock up almost 28% to 27.5 cents intra-day. Agreement details Over the five-year contract, MSI will offtake 70,000 tonnes (give or take 10%) of kaolin per annum from the Great White project on South Australia's Eyre Peninsula. Unfortunately, Andromeda can’t reveal the remuneration it will receive for every tonne of kaolin taken by MSI as the information is commercially sensitive. However, the company has confirmed the price-per-tonne is “significantly higher” than the $700 price point set out in its pre-feasibility study, published in June last year. This figure is also locked in for the first three years of the offtake contract, with MSI’s acting financer accounting for payment assurance. The binding offtake agreement is an initial deal and can be extended past the end date if both parties agree. A major deal Interestingly, the offtake agreement already accounts for a substantial amount of Great White’s planned production. Andromeda intends to manufacture 116,000 tonnes of refined halloysite-kaolin every year via an initial 250,000-tonne-per-annum plant that will be built at the project once operations commence. The company has also laid plans for a modest upfront processing plant and has plans to expand this operation to full capacity, processing up to 500,000 kilotonnes of material per annum within two years of first production. Simultaneously, MSI has indicated it has longer-term demand for Great White’s kaolin and ceramic products, known as Great White PRM and Great White CRM, respectively. As a result, the offtake agreement includes a binding clause that stipulates both parties will work towards increasing the kaolin provided from around 70,000 tonnes per annum to an aspirational 150,000 tonnes per annum. Additionally, Andromeda could secure a separate agreement with MSI to supply its Great White CRM product. This progresses as the ASX-lister continues discussions with other potential global offtake partners. Both Andromeda and its joint venture partner, fellow ASX-lister Minotaur Exploration, maintain MSI’s interest in kaolin and ceramic product offtake align with its expansion plan for the Great White Kaolin Project. Andromeda acts as the project’s manager, holding a 75% interest, while Minotaur retains the remaining 25% stake.