London metals trader pre-pays for Larvotto antimony offtake

Larvotto Resources has consummated an offtake deal with London metals trader Wogen Resources for antimony from its NSW Hillgrove mine with a $6.1m prepayment from a finance company associated with Wogan by the name of Xcelsior.

Together with $8m in funds already received via the exercise of options since the last quarterly, the company has banked $14.1m recently that will assist in boosting the exploration program and finalising the project's definitive feasibility study (DFS) at Hillgrove that also comes replete with a solid endowment of gold.

London-based Wogan is a leading physical metals and minerals trader with more than 50 years of experience. Under the agreement with Larvotto, it will exclusively manage the sale of antimony concentrate produced at Hillgrove across its first seven years of operation.

Xcelsior’s $4m prepayment facility will enable Larvotto to accelerate its exploration activities and complete metallurgical test work essential for the DFS, slated for completion in early 2025.

Both the offtake and the prepayment came after an extensive due diligence process run by Wogen and Xcelsior, including site visits by their staff and from other independent experts.

Xcelsior, as a partner of Wogen, specialises in financing projects that support energy transition in particular.

Larvotto Resources managing director Ron Heeks said: “With the signing of the offtake agreement, the US$4M prepayment is now payable. The funding will support completing metallurgical test work, finalising the DFS due in Q1 2025 and expand ongoing exploration efforts as we look to increase Hillgrove’s resource inventory. With the addition of the $US4M (approximately $A6.1M) and the $A8M received from the conversion of 2024 and 2025 options since the release of our last Quarterly Report, we are well placed to supercharge exploration to demonstrate the significant upside we believe exists at Hillgrove.”

Larvotto is now turning its attention to locking in a gold concentrate offtake deal to take advantage of the buoyant market conditions. Negotiations with multiple stakeholders are underway, with further announcements expected shortly.

Since buying the Hillgrove mine in 2023 from an administrator of the previous owner which fell over after experiencing difficulties with another of its projects, Larvotto has enjoyed a stellar share price run, reaching a peak of 76.5c, representing a spectacular rise of 1218 per cent from its February low of 5.8c.

The move has come largely on the back of a decision in August by China - which produces almost 50 per cent of the world’s antimony - to immediately ban the export of the critical metal, amongst others.

Antimony prices have predicably taken off, running by more than 50 per cent to US$33,550 per tonne (A$50,800), giving Larvotto a huge boost to its early August prefeasibility study numbers.

The company had forecast an annual EBITDA of $93m for a seven-year mine life from the production of 41,000 ounces of gold and 5400 tonnes of antinomy per year using an uber-conservative US$2000 (A$3081) per ounce gold price and a US$15,000 (A$23,100) per tonne antimony price.

With gold sitting today at US$2636 (AU$4060) and antimony soaring, there is clearly plenty of scope to improve on the project’s future numbers.

Larvotto’s meteoric rise has also shone a light on the precarious nature of the market for antimony, which is primarily used in solar panels and in military applications.

As the demand for the metal rises, traditional suppliers such as China are finding it increasingly difficult to protect their manufacturers from shortages and have resorted to export bans.

The West, in turn, is faced with the prospect of an urgent scramble to find alternative sources. As is evident in a deal the company recently completed with the US Defense Industrial Base Consortium, Larvotto is suddenly looking like the cockerel of the show.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au