American Pacific Borate & Lithium signs Chinese deal

By Meagan Evans. Published at May 29, 2018, in Mining

American Pacific Borate and Lithium Limited (ASX:ABR) has established an initial path to market for its boric acid sales from its 100%-owned Fort Cady Borate Project in Southern California.

Through its wholly owned subsidiary, Fort Cady California Corporation, ABR has entered into a non-binding strategic cooperation agreement with Chinese state-owned enterprise Sinochem Group subsidiary Sinochem Hebei Corporation.

Sinochem Group is a key state-owned enterprise and leading chemical services provider that plays a key role within China for borate supply and distribution. It is one of China’s four state oil companies, China’s leading chemical services provider, China’s largest agricultural input provider, and a vertically integrated modern agricultural operator.

The parties have agreed to develop ABR’s product offering into China and work to maximise sales to Chinese customers. There are also plans for a binding off take agreement to be entered into for up to 40k tonnes of boric acid per annum from ABR’s phase one production of 82k tonnes per annum.

The deal will be conditional on ABR achieving all relevant approvals and securing financing to commence production at its Fort Cady Borate Project, as well as ABR having completed certain preparation work, including providing Sinochem with samples, specifications and feasibility reports.

American Pacific Borate and Lithium, CEO, Michael Schlumpberger commented: “This is a very significant milestone for the Company. The non-binding Agreement with Sinochem Hebei Corporation establishes our first path to market and demonstrates the strategic nature of borates within China. We believe the signing of this agreement demonstrates demand for borates, as well as the strength and attractiveness of the Fort Cady Borate Project.

“This is significant as it gives the market visibility of credible financing support for the project. There are very few global sources of borates and demand is believed to be increasing at 6% per annum. We have a very substantial borate resource that can ultimately be meaningful in terms of global production for a sustained period of time.”

However it is an early stage of this company’s development and if considering this stock for your portfolio you should take all public information into account and seek professional financial advice.

The Fort Cady Boron and Lithium Project is a highly rare and large colemanite deposit with substantial lithium potential and is the largest known contained borate occurrence in the world not owned by the two major borate producers Rio Tinto and Eti Maden.

The Project has a JORC mineral estimate of 120.4 Mt at 6.50% B2O3 (11.6% H3BO3, boric acid equivalent) and 340 ppm Li (5% B2O3 cutoff) including 58.59 Mt at 6.59% B2O3 (11.71% H3BO3) and 367 ppm Li in Indicated category and 61.85 Mt at 6.73% B2O3 (11.42% H3BO3) and 315 ppm Li in Inferred category. The JORC Resource has 13.9 Mt of contained boric acid.

In total, in excess of US$50m has historically been spent at Fort Cady, including resource drilling, metallurgical test works, well injection tests, permitting activities and substantial pilot-scale test works.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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