LONDON (ShareCast) - (ShareCast News) - Shares in Strategic Minerals surged on Monday as the miner announced that it will sell 350,000 tons of magnetite to Galvin Investment Company.
The AIM-listed company's subsidiary Southern Minerals Group, the operator of the Cobre magnetite stockpile project in the US, agreed on Friday that it will sell up to 350,000 tons of magnetite at a market based price over several years and subject to availability to Galvin Investment Company.

The deal consists of a minimum purchase of 2,000 tons per month and with logistics at the mine it would result in a maximum supply, above existing client demand, of 6,000 tons per month, which would effectively double yearly sales from Cobre.

This is likely to be met without affecting Southern Mineral's net profit margin between 40% to 45% of sales revenue.

Before the deal becomes effective, Galvin must provide a $100,000 letter of credit from a bank and the contract will terminate if Southern Mineral's loses access to the magnetite stockpile.

Managing director John Peters wanted to "temper expectations and for caution to be applied" until the letter of credit is provided and sales starts.

He added that this process may take up to 30 days before the contract would effectively commence.

Shares in Strategic Minerals were up 34.67% to 1.01p at 1223 GMT.

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