A.I.S. Resources Ltd. [AIS-TSXV; AISSF-OTCQB] said Monday August 12 that it has signed a contract with an agricultural product manufacturer to supply 1,000 tonnes of manganese from Peru every two weeks for 12 months, based on the weekly benchmark price.
At the current grade and benchmark price, the contract is expected to produce US$274,000 in gross revenue every two weeks, or $9.26 million per annum, based-on a price of US$274.40 per tonne.
A.I.S. shares advanced on the news, rising 5.56% or $0.005 to $0.095. The shares are trading in a 52-week range of $0.04 and $0.175.
A.I.S. is aiming to be a low-cost producer of battery materials. Its focus is on lithium and manganese.
Manganese is a key ingredient used in the production of steel, aluminum and battery elements. Currently, steel production accounts for 85% to 90% of manganese consumption. The second largest use of manganese is creating an alloy with aluminum to produce a metal that is more resistant to corrosion.
Most aluminum beverage cans contain about 0.8% to 1.5% manganese.
A.I.S. said manganese ore has recently been selling for US$233 to US$250 per tonne.
Monday’s announcement comes after A.I.S. recently said it had commenced manganese trading operations in Peru. In a June 20, 2019 press release, the company said a contract had been signed with a miner and a deposit paid to buy 2,000 tonnes of manganese ore with samples from the mined ore averaging 45% MnO (manganese oxide). At that time, the company said it was finalizing buyer contracts in China.
More recently, the company released an update on its manganese shipping plans. It said 150 tonnes of manganese ore from a deposit in Peru had been transported to Lima and was ready for shipping to China. The company also said 350 additional tonnes had been bagged at the deposit site in Peru in preparation for shipping.
The company has said its near-term objective is to sell up to 10,000 tonnes of manganese ore per month by trading from small producers. Production will come from two Peruvian manganese deposits, the company said.
Meanwhile, A.I.S. said it is also negotiating additional sales agreements for high-grade fines manganese products with several purchasers who will be receiving the trial shipments.
The company has said it plans to add lump manganese to the A.I.S. product line.
On Monday A.I.S. President and CEO Phillip Thomas said he is pleased that the company has signed a long-term contract with a substantial buyer on competitive terms. “Our logistics team is working very efficiently and we have improved our loading process eliminating the cost of tuff bags,’’ he said.
Referring to the latest contract, the company said a manganese sale price of $5.60 Dry Metric Tonne Unit (DMTU) for 49% Mn was negotiated at a 1.75% discount to the Platts Manganese 44% CFR lump benchmark price for the week of July 26, 2019, of $5.70 per DMTU (or 1% of manganese content).
Payment terms are by letter of credit with 90% upon vessel departure from Lima, and 10% upon CIQ analysis in China on arrival.
The contract includes the 200 tonnes of manganese already shipped.
Currently, 300 tonnes of high-grade manganese ore fines have been loaded into 12 containers on a loose basis at Lima Port, eliminating the cost of tuff bags.
The next shipment of 500 tonnes is expected to occur on August 15, 2019. The voyage to Tianjin, China is estimated at 35-37 days.
“This contract will underpin our expansion plans,” A.I.S. said in a press release on Monday. “As soon as we reach 5,000 tonne shipments, we will revert to break-bulk Handymax shipping and realized further savings.”
Aside from its manganese interests, A.I.S. said it is developing two significant lithium projects, covering 5,225 hectares in Argentina’s lithium triangle.