First Graphite surges after announcing strategic purchase agreement
Shares in First Graphite rallied 17% in the first 30 minutes of trading after the company announced a strategic vein graphite purchase agreement.
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First Graphite (ASX: FGR), an emerging producer of premium grade vein graphite from its projects in Sri Lanka, has negotiated an important two-year binding agreement with government owned Kahatagaha Graphite Lanka Limited (KGLL).
Under the agreement, strategic supply will underpin First Graphite’s low-cost graphene production initiatives and allow for accelerated graphene production capacity.
Commenting on this development, Managing Director Craig McGuckin said, “First Graphite is very pleased to be associated with KGLL in a long-term supply agreement given that the group is an established supplier of high grade Sri Lankan graphite”.
The term of the agreement which specifies the quantity, quality and pricing of the material to be purchased provides a significant degree of certainty around the company’s operational and financial position in the near to medium-term.
McGuckin believes this development is an endorsement of First Graphite’s merits, considering it has been chosen as an exclusive partner at a time when other parties have been unable to secure similar deals.
From an operational perspective the agreement involves working with the government owned mine to provide assistance for value adding downstream opportunities for KGGL’s graphite.
In a statement that should be well received by investors, McGuckin said that the company is confident that saleable production from its mines will soon be available with production volumes improving throughout 2017.
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