No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Andrada Mining announced the extension of its exclusive offtake agreement with Thailand Smelting & Refining on Tuesday, securing a $3m unsecured advance to support the scaling of operations at its Uis mine in Namibia.
The AIM-traded tin producer said its wholly owned subsidiary, Uis Tin Mining Company, had amended its existing offtake agreement with Thailand Smelting & Refining, known as Thaisarco, first announced in November 2023.
In return for exclusivity over all tin concentrate produced by UTMC during the term of the agreement, Thaisarco would advance $3m to the subsidiary.
The advance was unsecured, would not accrue interest and would be repayable only at UTMC's discretion, except in certain events of default.
Andrada said the funds were expected to be received later this week.
Under the revised terms, UTMC could redeem the $3m within the first two years by giving 90 days' notice and paying a 30% redemption fee of $0.9m.
Alternatively, it could repay the principal in full on the second anniversary of the agreement or any subsequent anniversary with 60 days' notice and no additional fee.
Mandatory redemption would be triggered in the event of a change of control or legislative changes materially affecting supply.
The arrangement was structured as a prepayment against amounts owed or to become owed under the original offtake agreement.
Thaisarco retained exclusive rights to purchase all tin concentrate produced from the Uis mine processing facilities, including material from the Erongo region mining licence and approved third-party feedstock, subject to certain commercial limitations.
Pricing would continue to reference the London Metal Exchange tin price, with a minor percentage marketing discount applied on a sliding scale.
"This agreement is a result of the long-standing partnership we have built with Thaisarco, the strong operating performance we continue to deliver at Uis and the growing demand for tin," said chief executive Anthony Viljoen.
"In the current robust commodity market, this extension provides greater flexibility for UTMC as we scale our operations to capitalise on market demand."
He added that Thaisarco's decision to strengthen the relationship "underlies the significance of the Uis operation in the global tin market and demonstrates confidence in our team to achieve scale across the asset."
At 1248 GMT, shares in Andrada Mining were flat at 3.8p.
Reporting by Josh White for Sharecast.com.