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TAM Ceramics Group recently announced it has entered into a non-binding letter of intent (LOI) with Quest Rare Minerals Ltd. that TAM will agree to purchase from Quest up to 24,000 tons of zirconia annually. Quest expects to mine the zirconia from its Strange Lake deposit, constituting 100% of the anticipated annual zirconia production. Quest will deal exclusively with TAM for the sale of this quantity of product. The LOI also provides that TAM will coordinate with Quest to develop markets for zirconia.
The agreement is to be executed as soon as possible, but no later than December 31, 2014. The LOI provides that the definitive agreement will have an initial term of five years, with five possible renewal terms of five years each, for a total potential contract term of 30 years, covering the anticipated minimum 30-year production life for the Strange Lake deposit.
“The signing of our first off-take LOI, in this case for all of our byproduct zirconia, is a major milestone in the development of the Strange Lake deposit,” said Peter Cashin, president and CEO of Quest. “We believe that Strange Lake is a world-class asset that has the potential to produce a substantial quantity of strategic materials that will be attractive to customers around the globe. The LOI is the result of our continuing marketing efforts to engage customers with whom we intend to develop lasting business relationships. We view TAM’s involvement with our Strange Lake project as a significant vote of confidence in the considerable progress we have made in precipitating chemical-grade zirconia product at our pilot plant. The LOI will allow us to develop a partnership with a company that has many years of zirconium marketing and manufacturing experience.”