Sale of Silica Sand from Pittong
Released
Released
Announcement PDF
ASX ANNOUNCEMENT
22 June 2023
SALE OF SILICA SAND FROM PITTONG
HIGHLIGHTS
Three-year agreement signed with BQ Nominees Pty Ltd trading as Barfold
Quarry (“Barfold”) for the sale of silica sand
Silica sand is produced as a by-product at SUV’s Pittong hydrous kaolin plant
Revenue generated under the three-year agreement is significant and
estimated at ~A$1.5-A$2.0 million
Sale of silica sand offsets potential $9 per tonne liability to backfill the
Pittong mine
Barfold has agreed to purchase the existing silica sand stockpiles in year one
of the agreement and all future production of silica sand thereafter
Current saleable silica sand stockpiles at the Pittong processing facility
estimated to be ~180,000 tonnes
No capital cost to Suvo with Barfold to fully fund all processing, capital and
haulage costs
Suvo Strategic Minerals Limited (ASX: SUV) (“Suvo” or “the Company”) is pleased to
announce that it has signed a three-year agreement with BQ Nominees Pty Ltd trading
as Barfold Quarry (“Barfold”) for the sale of silica sand, a by-product produced from
its hydrous kaolin operation at Pittong, Victoria.
Barfold is a basalt quarry and recycled concrete company and will use the Pittong
silica sand in its premix concrete. The Company currently operates three batching
plants throughout Victoria and is in the process of building a fourth. Barfold will
mobilise its own mobile equipment at the Pittong processing facility in the coming
weeks and commence dry screening of the existing silica sand stockpiles. All
processing, capital and haulage costs will be incurred by Barfold.
Suvo estimates the current silica sand stockpiles at the Pittong processing facility is
~200,000 tonnes, of which ~90% (180,000 tonnes) is saleable silica sand.
Due to the supply shortages of sand and growth in the construction industry, it is
estimated that all 180,000 tonnes of silica sand stockpiles at the Pittong processing
facility will be processed and hauled by Barfold in the first year of the agreement.
Post depletion of the current stockpiles, sales of the by-product will be linked to
production of hydrous kaolin at Pittong. Based on current recoveries, 1 tonne of
hydrous kaolin produced generates ~1.2 tonnes of saleable silica sand. Barfold will
process and purchase all available future production during the term of the
agreement.
This is an amazing result for Suvo as it is estimated the cost to the Company to relocate and backfill would be approximately $9 per tonne in labour and equipment.
Not only is the Company generating free cash-flow, the sale of the silica sand is
reducing a future cash flow burden.
Managing Director and Chief Executive Officer Hugh Thomas commented:
“We are delighted to enter into this agreement with Barfold Quarry for the sale of our
silica sand from Pittong. In addition to generating immediate free cashflow and
generating A$1.5-A$2.0m across the term of the contract, the Company is also
saving an estimated $9 per tonne in costs to re-locate and backfill the Pittong mine.
The additional cash flow to be generated comes after the successful Placement which
was necessary to provide additional working capital to the Company as we expand
our sales team and technical knowledge. Our number one focus is to increase our
sales of hydrous kaolin in the Asia Pacific region, to match our increased production
capacity following the successful plant upgrade at Pittong.
We continue to make significant headway in defining and augmenting Suvo’ sales and
distribution strategy.”
Approved for release by the Board.
-ENDS-
Key Terms
Terms
Agreement
Term
3 years.
Product
Silica sand.
Tonnes
Revenue
Payment Terms
Exclusivity
Silica sand production is estimated to be between
250,000 and 330,000 tonnes across the term. This
includes the existing stockpile of ~180,000 tonnes.
Approx. A$1.5-A$2million across the term (again
dependant on production levels).
Barfold must pay each invoice within 14 days from
the date of issue with Invoices issued fortnightly.
Barfold has the exclusive right to prepare, wash, haul
and sell the Product from the Stockpiles.
If Suvo or Barfold suffers an insolvency event, subject
to Chapter 5 of the Corporations Act, either party
may terminate the agreement with immediate effect.
Termination
If Suvo or Barfold is in breach of its obligations and
either party has provided a notice specifying the
breach requiring rectification (rectification period to
be at least 15 business days), and within that period
the party has not rectified the breach to the other
party’s satisfaction, either party may terminate the
agreement with immediate effect.
For further information, please contact.
Hugh Thomas
Managing Director and Chief Executive Officer
E: hugh.thomas@suvo.com
Company Profile
Suvo Strategic Minerals Limited is an Australian hydrous kaolin producer and exploration company listed on the
Australian Securities Exchange (ASX:SUV). Suvo is focused on production at, and expansion of, their 100% owned
Pittong hydrous kaolin operation located 40km west of Ballarat in Victoria. Suvo’s exploration focus is on near-term
kaolin and high purity silica assets with 100% owned Gabbin (kaolin), Eneabba and Muchea (silica sands) projects
located in Western Australia.
Pittong Operations
The 100% owned Pittong Operations, located in Victoria 40km west of Ballarat, is the sole wet kaolin mine and
processing plant in Australia and has been in operation since 1972. Pittong comprises the Pittong, Trawalla and Lal
Lal deposits located on approved Mining Licences MIN5408, MIN5365 and MIN5409 respectively.
At Pittong mining contractors deliver crude kaolin ore to stockpiles from the two currently operating mines, Pittong
and Lal Lal. The plant takes its feedstock from the ROM and it is processed into four separate product forms for end
users. These product forms are 10% moisture lump, high solids slurry, 1% moisture powder and 1% moisture
pulverised powder. The solids slurry is used in paper and board manufacturing. The other products are used in paper,
coatings, paint and specialist industries including rubber and pharmaceutical applications. Around 20‐25kt per annum
is supplied to various end users.
Category
Indicated
Inferred
Total
Kaolinised Granite
Tonnes (Mt)
Pittong
3.74
1.96
5.69
Kaolinised Granite
Tonnes (Mt)
Trawalla
9.9
2.8
12.7
The Company first disclosed the Trawalla and Pittong Mineral Resource Estimates on 22 September 2021 and 1 March 2022.
The Company confirms that it is not aware of any new information or data that materially effects the Announcement and
confirms that the material assumptions and technical parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed.
Gabbin Kaolin Project
The 100% owned Gabbin Kaolin Project (White Cloud) is located 215km northeast of Perth, Western Australia. The
project area comprises four granted exploration licences (E70/5039, E70/5332, E70/5333, E70/5517) for 413km2,
centred around the town and rail siding of Gabbin. The generally flat area is primarily cleared farming land devoid of
native bushland and is currently used for broad-acre cereal cropping. A mining access agreement is in place over the
current resource area with the landowner and occupier.
The main rock types at Gabbin are primarily Archaean granite, gneiss, and migmatite. These rocks are overlain and
obscured by Tertiary sand and Quaternary sheetwash. The weathering profile is very deep and contains thick kaolin
horizons capped by mottled clays or laterite zones. The current JORC 2012 Mineral Resources are 72.5Mt of bright
white kaolinised granite with an ISO Brightness of 80.5%.
Eneabba Silica Sands Project
The 100% owned Eneabba Silica Sands Project is located 300km north of Perth, Western Australia. The project
comprises four granted exploration licences (E70/5001, E70/5322, E70/5323, E70/5324) for 169km2. The project
is located on the Eneabba Plain whose sandy cover is very flat to gently undulating. Outcrop is rare due to the
accumulations of windblown and alluvial sand at surface. Below this is a thin hard silcrete or lateritic claypan which
overlies deep white and yellow sands.
Forward-Looking Statements
This release may contain certain forward-looking statements with respect to matters including but not limited to the
financial condition, results of operations and business of SUV and certain of the plans and objectives of SUV with
respect to these items.
These forward-looking statements are not historical facts but rather are based on SUV’s current expectations,
estimates and projections about the industry in which SUV operates and its beliefs and assumptions.
Words such as "anticipates," “considers,” "expects," "intends," "plans," "believes," "seeks," "estimates", "guidance" and
similar expressions are intended to identify forward looking statements and should be considered an at-risk
statement. Such statements are subject to certain risks and uncertainties, particularly those risks or uncertainties
inherent in the industry in which SUV operates.
These statements are not guarantees of future performance and are subject to known and unknown risks,
uncertainties, and other factors, some of which are beyond the control of SUV, are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted in the forward-looking statements. Such risks
include, but are not limited to resource risk, product price volatility, currency fluctuations, increased production costs
and variances in product grade or recovery rates from those assumed in mining plans, as well as political and
operational risks in the countries and states in which we sell our product to, and government regulation and judicial
outcomes. For more detailed discussion of such risks and other factors, see the Company’s Annual Reports, as well
as the Company’s other filings.
SUV cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking
statements, which reflect the view of SUV only as of the date of this release.
The forward-looking statements made in this announcement relate only to events as of the date on which the
statements are made.
SUV will not undertake any obligation to release publicly any revisions or updates to these forward-looking
statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory authority.
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