VHM Signs Non-Binding HMC Offtake Term Sheet With Mitsui

VHM (ASX:VHM) agreed a non-binding term sheet with Mitsui & Co. for the purchase of heavy mineral concentrate (HMC) from its Goschen project in Victoria, setting out commercial terms ahead of a binding offtake agreement the parties are negotiating.

Under the proposed terms, Mitsui would purchase 50% of Goschen's HMC production, up to 65,000 tonnes per annum, for an initial three years from first production, with a further three-year extension by mutual agreement. Pricing would follow an agreed market-linked formula referencing prevailing zircon and titanium dioxide prices on a free on board (FOB) Australian port basis. The term sheet builds on a non-binding Letter of Interest the companies signed earlier. Mitsui will, at its discretion, propose a trade finance facility to VHM, subject to due diligence. VHM says it is discussing larger volumes with Mitsui, with the objective of securing commitments for up to 100% of Goschen HMC production. The company separately has a take and pay offtake with Iluka Resources for 100% of Goschen rare earth concentrate.

The term sheet is non-binding, the trade finance facility has not been offered, and the release does not state a contract value or timing for first production or a Final Investment Decision.