Marquee Resources has signed a non-binding memorandum of understanding relating to offtake from its Werner Lake cobalt-sulphide project in the province of Ontario, Canada. Highlights of the announcement include the following.
- Non-binding cobalt-copper offtake agreement signed with Zhejiang Meidu Haichuang Lithium Battery Technology Co. Ltd (‘China Hitrans’), a significant Chinese enterprise ranked highly in China as a producer of battery cathode materials.
- Negotiations to secure a formal offtake agreement with China Hitrans are underway.
- In the next three months, Marquee will provide a metallurgical sample for independent testing, and China Hitrans will work with the former to determine the best potential feed for its needs.
Analysis: this news came as a pleasant surprise, as it is unusual for potential offtake partners to evince interest in a project at such an early stage of development. That said, few primary sulphide-cobalt projects in first-world jurisdictions have the potential to commence production within a relatively short space of time, and it appears China Hitrans aims to get ahead of the curve.
Significant work – most notably, metallurgical testwork – remains to be done ahead of what could become a binding agreement. However, this announcement indicates that, despite difficult market conditions (as highlighted by Marquee’s current enterprise value of less than AU$2 million), the company is advancing its Werner Lake project with an eye to the future, and establishing relationships that may fast-track project development. Clearly, end-users are still active in the sector, despite a retreat from the record highs in the cobalt price over the past few months. We anticipate more information on offtake during the first quarter of 2019.
Catalysts: aside from details of the metallurgical testwork undertaken by China Hitrans, we expect a number of other key announcements in the coming months, outlining:
- assay results from the phase 2 drill programme – 4Q18;
- the inaugural resource – 4Q18/1Q19, and
- recommencement of the phase 3 drill programme – 1Q19.