Bauxite Resources enters off-take deal

Thursday, Nov 06, 2008

Perth-based Bauxite Resources Ltd has entered into an off-take agreement with a Chinese alumina producer to supply all of its entire requirements. Bauxite and Shanxi Wusheng Aluminium Company Ltd has entered into a memorandum of understanding whereby the former company will supply up to 2.8 million tonnes of bauxite each year. The bauxite will be sourced from the company's Darling Range tenements.

The deal also provides for funding of capital works to be arranged by Shanxi, and a direct equity investment through a placement of 15 million shares in Bauxite at a share price yet to be determined. Bauxite has agreed not to enter into any off-take deals with third parties for the next three months as both companies finalise details of the off-take and funding deals.

Perth-based bauxite explorer, Bauxite Resources Limited, has signed a Memorandum of Understanding with Chinese alumina producer, Shanxi Wusheng Aluminium Company Limited (Shanxi Wusheng), with the aim of finalising an agreement within three months to supply quality bulk bauxite Direct Shipping Ore (DSO) to China.

The core aim of the MOU is for the two companies to work together with a view to delivering the first shipment of ore within 12 months of signing a formal off-take agreement under the terms of the MOU. In the MOU with Shanxi Wusheng, BRL is to provide up to two million eight hundred thousand tonnes per annum of bauxite sourced from BRL's extensive Darling Range tenements and shipped from a nominated port in Western Australia.

The MOU also provides for funding of capital works to be arranged by the Chinese company for infrastructure repayable out of supplies of bauxite, as well as a direct equity investment by way of a placement of up to 15 million shares in BRL at a share price to be determined upon execution of the official contract.

BRL has agreed not to enter into any off-take agreements with other third parties for a period of three months, giving BRL and Shanxi Wusheng an exclusive period to finalise the details of the off-take and related capital and funding requirements. This three month exclusivity period does not affect negotiations relating to direct investment opportunities in BRL from third parties who may be interested in the long-term alumina refinery stage two option, currently being investigated by the Company.

Source: WA Business News