$750 Million Offtake Agreement DetailsHuge thanks QuarterDollar for pointing me in the correct direction to find the presentation, also, nicely done on your notes and memory, bang on from the presentation 210,000 MTU's per year for the offtake agreement.
The 210,000 MTU's was more than 80 per cent of what Almonty had initially planned to produce for the first few years (around 250,000 MTU's) but now is about 45% of production at the ramped up level of 450,000 - 500,000 MTU's per year which has now become Almonty's initial planned production.
In the presentation they talk about the offtake a number of times, including at about 4 minutes, 9 minutes and again with a slide at about 25 minutes.
For reference the presentation is:
UK Presentation from 2020 I see this as very important for a couple of reasons, all of which have been discussed before but I'll mention again.
The offtake guarantees Almonty $16 million a year of free cash flow as the price is $235 / MTU of APT or about $183 / MTU of the product Almonty sells. Almonty's cost of production is roughly $106 / MTU, but this will likely be lower because of the grade increases Lewis has mentioned.
$16 million a year for about 45% of the production is a nice margin of safety.
Now, I expect there will be no problem selling the other 290,000 MTU's each year, most likely to South Korea I think and most likely much of it will be under an offtake agreement of some kind to be announced in the coming months.
So assume similar terms to the offtake agreement with a price floor, on most of the 500,000 MTU's, that is a nice floor profit of about $38 million, again, at prices much lower than current prices for Tungsten.
If you increase the price to current levels, about $330 / MTU APT or $257 / MTU for the product Almonty sells (which the offtake allows for), well the free cash flow of the GTP offtake agreement at 210,000 MTU's becomes $32 million, and if you assume Almonty can sell all 500,000 MTU's which again I assume they can, then Almonty has about $75 million in free cash flow from Sandong within the first couple years of production.
Reminder, Almonty currently trades at a market cap of about $120 million USD ($158 million CDN)
Reminder #2, Almonty is already producing tungsten with small profits at current prices, and they are doing this while processing similar levels of ore to that which will be needed to be processed at Sandong. I mention this because it proves Almonty already knows how to process the amount of ore needed to operate Sandong at the projected levels. The presentation provided a nice reminder of Almonty's proven capability to process ore for Tungsten.
Reminder #3, All of the above ignores the Molybdenum resource which Lewis has suggested will be of similar value to the Tungsten resource.
QuarterDollar, you being able to point me towards this presentation made my day. Thanks again.
Go Tungsten, Go Almonty.