Bens Creek shareholders will be encouraged by Thursday's news that the company has entered into its first offtake agreement for its washed Hi-Vol-B metallurgical coal with Integrity Coal Sales Inc.
An offtake agreement is where the off-taker (in this case, Integrity Coal) buys all or a significant share of the output from a facility.
The AIM-quoted company said the agreement is for approximately 22,000 US Short ton of product per month for an initial twelve-month period starting from January. The deal covers about 50% of the anticipated production volumes of the company's proposed annual production under its existing mine plan.
Integrity was founded in 1990 and is a supplier of U.S. metallurgical coal to the global marketplace.Â
The sales price agreed by the 2 companies will be closely linked to the Metallurgical Coal Assessment Index, which is published by S&P Global Platts daily. For example, on October 19, the price was $305 per metric tonne, with the equivalent cost for a short ton being $277.
Bens Creek shares are currently up 10.78% at 11.3p, a few days after its IPO.
Adam Wilson, CEO of Bens Creek, said: “Bens Creek has had a strong start as an AIM quoted company. We are delighted that strong investor demand at the time of our very recent IPO has been followed by strong customer demand for our product.Â
“We are therefore pleased to have secured the company's first offtake agreement with Integrity Coal Sales, a stalwart in the US coal industry, at close to prevailing market prices, for approximately 50% of our expected annual production plan. As we look to move into production during Q4 2021, we will in due course seek to secure additional sales agreements with Integrity or with third-party customers.”
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