Development-stage phosphate mining company Arianne Phosphate has entered into a nonbinding memorandum of understanding (MoU) with Chinese State-owned enterprise Sinoconst relating to the development of the Lac à Paul project in Quebec's Saguenay-Lac-Saint-Jean region.

The parties have agreed to work towards a final binding agreement, which would include full project financing, Arianne said on Tuesday.

On a parallel track, Sinoconst would advance efforts to secure offtake in support of the financing package under the MoU.

Arianne said that Sinoconst’s participation in the development of Lac à Paul was tied to finalised project financing commitments. 

"Where China used to be self-sufficient in phosphate, many industry analysts now see the country heading for a deficit in phosphate rock concentrate, joining the likes of India, another country of over one-billion people. Arianne believes that concluding definitive financing agreements would be mutually beneficial; it would allow Arianne the financing necessary to develop its mine and allow China, through Sinoconst, an opportunity to access high-quality phosphate concentrate. The intent is now for both parties to reach a fully binding agreement and, as per the MoU, would directly tie Sinoconst participation in the project's development to their ability to provide necessary project financing which, we believe, will be supported by offtake discussions; a structure often seen in Chinese involvement in large mining projects,” said Arianne Phosphate CEO Brian Ostroff.

He added that the discussions with Sinoconst should accelerate the company’s ongoing discussions with other potential suppliers, offtakers and financial partners.

Arianne noted that during the past 60 years since its establishment, Sinoconst had been involved in hundreds of projects in 40 separate countries in different sectors including mining and agriculture. Besides its involvement in many global development projects, Sinoconst had established in-depth strategic cooperation relationships with many large financial institutions that can assist in the financing of these large developments.