Silkroad Nickel bags US$90m offtake deal

Tay Peck Gek

Published Mon, Mar 15, 2021 · 09:46 PM

SILKROAD Nickel has inked an offtake agreement worth over US$90 million to supply 2.7 million metric tonnes of high-grade nickel ore to a Tsingshan Group unit.

The Catalist-listed laterite nickel ore producer in Indonesia announced the deal in a regulatory statement on Monday, saying it will supply PT Ekasa Yad Resources 2.7 million metric tonnes of high-grade nickel ore from this month till December 2022, with a minimum quantity of 50,000 metric tonnes per month.

The contract, going by the benchmark price for nickel ore set by the Indonesian government, is estimated to be worth over US$90 million. It is expected to have a positive impact on the net tangible assets per share and earnings per share of the group for the current financial year to December, Silkroad Nickel said.

Hong Kah Ing, chief executive of Silkroad Nickel, commented: "The Group is preparing to deliver its first shipment under the agreement within the next two weeks and expects to gradually increase its production from April 2021 to fulfill the new offtake commitments under the agreement...

"The nickel ore is expected to be used to meet the increasing demand from the emerging electric vehicle battery industry. The group is investing in its downstream nickel pig iron processing facility in 2021 and intends to use part of the cash flows generated from this agreement to build its proposed RKEF (rotary kiln electric furnace) smelter project."

The counter dropped 1.25 per cent to S$0.395 on Monday before this announcement.