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Gunson Resources hits three month high on major ilmenite offtake agreement

Gunson Resources (ASX: GUN) shares closed at a three month high today after the company secured an offtake agreement with DuPont, the world's largest pigment producer, for chloride ilmenite production from the Coburn Project over a five year period.

The closing price of $0.235 is an 11.91% increase on yesterday's close of $0.225, and an impressive 52% improvement on a low of $0.155 in January

Gunson secured the deal with DuPont for its proposed share of Coburn production early this month.

Importantly, pricing under the agreement reflects the high chloride ilmenite feedstock grade of the product of 61.5% titanium dioxide.

This will have a positive impact on the financial returns from Coburn, which have also been enhanced by supply shortages and rising demand for zircon and titanium dioxide raw materials.

The most recent Coburn Definitive Feasibility Study model shows capital costs of $179 million, while improving product price forecasts have resulted in an internal rate of return of 28.3% and a net present value (8%) of $233.7 million.

In further positive news, Gunson has a proposed joint venture arrangement in the works with a major East Asian industrial group.

A non-binding term sheet executed last year allows the industrial group to earn a large minority joint venture interest in Coburn.

Gunson expects to conclude sales agreements once detailed terms of the joint venture arrangement are finalised.