Eagle is pleased to announce the successful negotiation of amended terms to its supply contract (the “Agreement”) with a long-established leader in the North American refractory industry (the “Purchaser”).
Eagle’s CEO Jamie Deith comments “We have worked very closely with this customer for nearly ten years, and have had a supply contract in place with them since 2010. Our current and future stakeholders can remain confident that we have the support of a bona fide customer who first and foremost wants us as a long-term graphite supplier, and who has even prepaid for substantial quantities of graphite. Eagle Graphite remains the only North American graphite junior with a fully permitted and operational graphite quarry.”
Key terms of the amendments to the Agreement follow:
– The deadline for Eagle to deliver between 1,600 and 2,150 tonnes of flake graphite to the Purchaser, or alternatively to repay the outstanding amount related to prepayments made by the Purchaser, has been extended from the previous deadline of June 30, 2016 to December 31, 2019;
– Eagle will reimburse US$20,000 of legal expenses incurred by the Purchaser.
The Agreement continues to be secured by the assets of Eagle Graphite Corporation (“EGC”), Eagle’s 100%-owned operating subsidiary through which the Black Crystal graphite quarry is held, and includes a number of provisions that are customary to secured agreements, including ensuring the Purchaser’s priority as first creditor of EGC.
Eagle and the Purchaser are also continuing discussions toward implementing objectives first established under a November, 2014 Letter Of Intent, under which volumes of graphite deliverable by Eagle would be significantly increased from the current commitment of 3,075 tonnes per year, and the term of the Agreement extended significantly past the current end date of December, 2023.
Eagle may elect to fulfil its obligations under the Agreement by bringing the Black Crystal graphite project into production. Currently, a decision to enter into production would not be based on a feasibility study of minerals reserves demonstrating economic and technical viability. The Company cautions readers that production may not be economically feasible and historically these projects have a much higher risk of economic or technical failure.