Tertiary Minerals signs fluorspar offtake with Possehl

By IM Staff
Published: Thursday, 14 December 2017

Possehl will provide pre-financing to help develop Tertiary’s fluorspar projects in a deal that will see the trading company purchase the majority of Tertiary’s acidspar.

Global commodities trading group Possehl Erzkontor GmbH & Co KG has signed a memorandum of understanding (MoU) with Tertiary Minerals plc under which it will purchase acidspar from Tertiary’s three fluorspar projects once production starts.

Possehl will commit to buying a minimum of 70% of commercial-grade acidspar under the agreement, which will be effective from the date of execution to a date that is one year from the start of first commercial production at any of the three fluorspar projects.

Tertiary controls two significant Scandinavian projects, Storuman in Sweden and Lassedalen in Norway, as well as a deposit in Nevada, United States, which is called the MB project.

As a condition of the offtake agreement, Possehl will provide part of the pre-financing to Tertiary under which funds will be advanced to Tertiary to assist it in meeting its working capital needs and/or its capital investment needs for the development of the fluorspar projects.

Fluorspar is an essential raw material in the chemical, steel and aluminium industries.

Stronger hydrofluoric acid and aluminium fluoride markets are also driving acidspar prices higher - the material is a key feedstock for both industries.

After several years of low prices and weak demand, this uptick in prices could be a turning point for the fluorspar market, several market participants told Industrial Minerals.

Production of fluorspar has decreased in recent years, and many consumers are eager to see new supply come onstream to plug the gap.

Tertiary, which is listed on London’s Alternative Investment Market (AIM), has been moving forward with the Storuman project in Sweden, putting the mine through the permitting process in recent months, while metallurgical testwork at MB in Nevada is also progressing, according to the company’s latest operational update in October.

"This strategic relationship represents a critical building block in our quest to becoming a leading supplier of fluorspar to the global markets," Tertiary managing director Richard Clemmey said in a statement.

"Not only does this provide the company with the opportunity, and competitive advantage, to secure long-term sales contracts with key fluorspar end-users," he added, "but also access to pre-financing, which can form an important part of the overall development funding package for our fluorspar projects and potential future acquisitions."