Kunming Gongxin Trading (KGT) has signed a letter of intent to purchase 600,000 tonnes of iron ore from Astra Resources’ Babuyan Channel iron sand project in northeast Luzon. An offtake agreement will be signed once KGT has received confirmation of the grade of iron ore within the project area, and outlines KGT’s intent to buy 50,000 tonnes of iron ore each month for the next year.
Astra chief executive officer Dr Jaydeep Biswas says, “As soon as full operation starts, which is slated for the end of 2012, an offtake agreement will be prepared and signed between a special purpose vehicle owned by Astra and KGT.”
The Babuyan Channel iron sand lode is in the province of Cagayan and is estimated to contain more than 31.3 billion tonnes in the Mineral Production Sharing Agreement Areas (MPSA). Phase 1 of Astra’s mining tenement holds only a fraction of the lode.
Astra will commence works on the first phase of the project once an agreement is signed between its joint venture (JV) entity, Cagayan River Astra Philippines, and the Cagayan provincial government.
Astra’s managing director Silvana De Cianni says the agreement will confirm the JV’s authority to dredge, mine, extract and utilize ‘quarry resources’, sand particles and other materials such as magnetite iron sands from the Cagayan River Delta.
“The authority to dredge the assigned area, a 200 metre by 12km strip along the mouth of the Cagayan River, is stipulated to be for a period of 25 years, with annual production expected to reach gross sales of about 1 million tonnes by 2014,” Ms De Cianni said.
The initial estimated resource is 135 million tonnes, however Astra is negotiating the acquisition of additional mining areas alongside MPSA 1, 2, 3 and 4 to add to the JV.