Western Areas has struck an offtake sale and purchase agreement with Sumitomo Metal Mining for product from its Forrestania nickel operation.
The deal with the Japanese mining and refining conglomerate is for its nickel sulphide precipitate product, and expires at the end of next June.
Western said this product has a grade of between 45 per cent and 50 per cent nickel, and it had been selling it to Sumitomo on a spot sale basis for many months.
No set volume is to be supplied under the agreement, however, Western Areas said it expected that all of that product produced will be sold to Sumitomo.
No monetary details were disclosed.
The company’s conventional nickel sulphide product, which it supplies to Tsingshan and BHP Billiton Nickel West, has a grade of around 14 per cent nickel.
The Forrestania project is located 150 kilometres south of Southern Cross and 400km east of Perth.
Western Areas managing director Dan Lougher said the company was pleased to announce a longer-term offtake agreement.
“The execution of the agreement with SMM validates the market demand for this premium NSP product, while providing the contractual framework to streamline deliveries and remove the need for monthly negotiations on terms prior to each shipment,” he said.
“Formalising a relationship with a high quality international resource company with downstream processing capabilities and direct links into the electric vehicle battery market is a significant step forward in our strategy to supply diversified nickel products into the rapidly evolving nickel market.”
Yesterday, the company reported that last quarter it had achieved its highest quarter of nickel sales, with sales to 5,890 nickel tonnes.
Its shares jumped 8.2 per cent the day before the quarterly results announcement.
Shares in Western Areas were up 3 per cent to trade at 2.44 at 3.45pm AEST.