NSL has struck an off-take agreement for iron ore produced at the Kurnool dry separation iron ore plant for up to 5,000 tonnes of iron per month. With the end of the of the monsoon season, it may be possible for NSL to gradually ramp up in production at Kurnool and sales tonnages to increase over the next few months.

The buyer is a domestic steel producer and has agreed to purchase the iron ore ex-gate from NSL's plant located in the southeast Indian state of Andra Pradesh.

The initial agreement period is for three months, with extensions possible.

Pricing is in line with the prevailing market where 54-58% iron ore can be sold ex gate to domestic steel mills for between INR 3400 to INR 4900 per tonne, depending on the final grade.

Using a six month average exchange rate, this represents approximately USD 62 to USD 90 per tonne ex gate.

The offtake partner has been working with NSL during the quarter, and has trialled and tested product produced through the dry separation plant in its kilns with good results.

It will look to use the material as feedstock for its steel manufacturing plant.

During the quarter, material advancement has been made in improving the mechanical reliability of the plant, employment and training of local operators at the Kurnool dry separation iron ore plant.

However, the ramp up has been slower than anticipated due, in part, to the monsoon season which has seen consistent sporadic showers impacting plant operation and output.

As a result, production tonnes are much lower than internal forecasts, impacting revenue from operations over the quarter.

With the end of the monsoon season, the Company is cautiously optimistic about the continuing ramp up in production and sales tonnages over the next few months.

Source - Proactive Investors

(www.steelguru.com)