Zeotech Limited has locked in a binding five-year offtake agreement with MSI, granting exclusive marketing rights for its kaolin products across key Asian markets. This deal, valued at approximately AUD 204 million, sets the stage for early cash flow generation and advancement of its low-carbon concrete additive project.
- Binding five-year kaolin offtake agreement with MSI
- Exclusive marketing rights in China, Taiwan, Hong Kong, South Korea, and Japan
- Committed volume of 950,000 tonnes exceeds recent feasibility study projections
- Agreement valued at AUD 204 million with over 45% average net margin
- Mining operations expected to commence in first half of 2026 at Toondoon
A Strategic Partnership with MSI
Zeotech Limited (ASX, ZEO) has taken a significant step forward by executing a binding offtake agreement with Jiangsu Mineral Sources International Trading Co, Limited (MSI), a leading bulk raw material trader based in China. This agreement grants MSI exclusive rights to market and distribute Zeotech’s kaolin direct shipping ore (DSO) and cosmetic kaolin products across major Asian markets including China, Taiwan, Hong Kong, South Korea, and Japan.
The deal formalizes terms initially outlined in a binding term sheet signed in August 2025 and follows a memorandum of understanding from May, reflecting a carefully negotiated partnership that aligns with Zeotech’s growth ambitions.
Volume and Value Beyond Expectations
Over the initial five-year term, MSI has committed to purchasing 950,000 tonnes of kaolin products, a volume that notably exceeds the quantities projected in Zeotech’s recent AusPozz™ Project Preliminary Feasibility Study. At Year 1 pricing, the agreement is valued at approximately AUD 204 million, delivering an impressive average net margin exceeding 45% across the term.
This volume commitment not only validates the quality and demand for Zeotech’s kaolin but also provides a robust revenue foundation to support the company’s broader strategic initiatives.
Advancing Mining Operations and Infrastructure
Mining activities are anticipated to commence in the first half of 2026 at the Toondoon Kaolin Project in Queensland, Australia. The project benefits from an approved mining lease and is recognized as one of the highest-grade kaolin deposits in the country. Capital expenditure to initiate mining is estimated at AUD 7.6 million, with the company exploring options to fund part of this from early operating cash flows.
Zeotech is actively progressing necessary approvals, including environmental and cultural heritage management plans, and has engaged key consultants and engineering partners to upgrade regional infrastructure such as access roads. The Port of Bundaberg will serve as the shipping point for all product deliveries under the agreement, leveraging a recently signed letter of intent with Gladstone Ports Corporation to develop manufacturing and storage facilities.
Implications for Zeotech’s Low-Carbon Ambitions
CEO James Marsh emphasized the strategic importance of this agreement, highlighting how early cash flow generation will underpin the advancement of Zeotech’s flagship AusPozz™ Project. This project focuses on producing high-reactivity metakaolin, a key additive for low-carbon concrete, aligning with global efforts to reduce greenhouse gas emissions in the built environment.
The partnership with MSI not only secures a reliable market for Zeotech’s products but also positions the company as a significant player in the sustainable materials sector, with potential to scale operations in response to growing demand.
Conditional Yet Promising Outlook
While the agreement is binding, it remains conditional on Zeotech achieving financial close and securing all necessary regulatory approvals by March 2026, with a 90-day extension possible. Failure to meet these conditions would result in termination of the contract, underscoring the importance of timely execution.
Looking ahead, pricing beyond the first year will be subject to annual negotiation, introducing some variability in revenue forecasts. Nonetheless, the deal marks a pivotal milestone, providing Zeotech with a strong commercial platform to build upon.
Bottom Line?
Zeotech’s binding offtake deal with MSI sets a solid foundation for growth, but execution risks and pricing dynamics will be key to watch.
Questions in the middle?
- Will Zeotech secure financial close and regulatory approvals on schedule to activate the agreement?
- How will annual price negotiations beyond Year 1 impact long-term revenue and margins?
- What are the prospects for expanding production volumes beyond the initial five-year term?