How Off-Take Agreements Work for Junior Concession Holders: A Buyer's Guide

A trader from Ningbo asked me last month how we structure off-take on our antimony blocks. He'd already been burned twice in Pakistan. Wired prepayment, got half the tonnage, spent 14 months chasing the balance through a Karachi court. So when he asked, he wasn't asking about grade sheets. He was asking about how a junior concession holder actually delivers.

That conversation is why I'm writing this. Because most of the off-take templates floating around the market were drafted for producing mines with three years of feed data. They don't fit a junior with a concession, a resource estimate, and a bulk sample. And when buyers try to force that template onto us, deals die at the LOI stage.

Here's the thing. A junior concession holder in Gilgit-Baltistan isn't Glencore. We hold the license, we've done the trenching and channel sampling, maybe we've got a few hundred tonnes of bulk sample sitting at the pit mouth. What we don't have is a 20-year mine plan with a bankable feasibility. So the mineral off-take agreement has to reflect that reality — or it collapses the first time someone opens the contract.

What a realistic off-take structure actually looks like

The workable model I've seen close, three times in the last 18 months, has four moving parts.

First, tonnage tiers. Not a flat annual figure. You commit to a Phase 1 volume — say 500 tonnes of antimony concentrate over 9 months from a specific concession block. Phase 2 kicks in only after Phase 1 delivers and both sides review actual grade and recovery. This protects the buyer from paper commitments and protects us from being sued because a shear zone pinched out.

Second, pricing tied to a published benchmark with a discount schedule. For antimony we use the Rotterdam price minus a treatment charge that reflects concentrate grade. For copper concentrate it's LME minus TC/RC. For jade and granite it's negotiated per-block because there's no benchmark — that's a different animal entirely and I'd handle those buyers separately.

Third, prepayment against a standby letter of credit or an escrow structured through a bank in Dubai or Singapore. Not a wire to a Pakistani account against a promise. I've told buyers this directly — if someone's asking for 100% prepayment upfront on a first shipment, walk away. That's not how a serious junior operates. A 20–30% mobilization advance secured by SBLC, balance on CIQ inspection at load port, is the structure that actually works.

Fourth, an independent inspector — SGS, Alfred H Knight, Bureau Veritas — at both the pit and the port. Non-negotiable. I insist on it as much as the buyer does, because it's the only thing that stops a dispute six months later when the assay at destination comes back 0.8% lower than shipment.

What buyers get wrong when they approach juniors

Look, I've had maybe 40 serious off-take approaches in the last two years. The ones that failed almost always failed for the same reasons.

They asked for a five-year fixed tonnage commitment on a concession that hasn't even finished its resource drill program. I can give you inferred and indicated categories, I can give you channel sample composites across 340 metres of strike, but I can't guarantee 8,000 tonnes a year for five years off a resource that hasn't been drilled to measured category. Anyone who signs that is either lying or desperate. Neither is a good counterparty.

They wanted exclusivity across the entire concession portfolio in exchange for financing one block. Honestly this one annoys me. If you're financing development on our molybdenum block in the Karakoram, you get off-take on the molybdenum. You don't get first right of refusal on our copper or our tungsten. Those are separate assets, separate geology, separate capex.

They tried to price at spot minus 35%. Which — I understand the logic, country risk premium, junior premium, execution premium. But there's a floor below which we simply can't ship. The stripping costs in GB terrain aren't Chilean open-pit costs. Trucking from Skardu to Karachi port is 1,650 km and about $92 per tonne last time we ran the numbers on a full container load. Squeeze the price below the floor and the concession holder just stops shipping. Then you're back in court.

And the fourth mistake — treating the concession holder as a supplier rather than a partner. In a JV or long-term mining off-take, we're the operator on the ground. We're managing the community relationship, the district mining office, the security cover, the seasonal access window (which for some of our higher blocks is genuinely only May through October). If the buyer treats that as our problem alone, the relationship doesn't survive the first bad quarter.

The clauses I actually pay attention to

Force majeure language for road closures. The Karakoram Highway gets cut by landslides. Not maybe. It does, every season. The contract has to acknowledge that a 3-week KKH closure isn't a breach.

Assay dispute resolution — umpire lab pre-agreed in writing. We use a lab in Singapore as umpire on most contracts now. Saves months.

Governing law. I've signed contracts under English law, under Singapore law, and once under DIFC. Never under Pakistani law for an export off-take, and no serious buyer should accept that either. It's not about distrust of my own jurisdiction — it's about enforcement speed if something goes sideways.

Change of control on the buyer side. If the trader I signed with gets acquired by someone I'd never have done business with, I want an exit.

If you're a buyer sitting in Rotterdam or Shanghai or Jebel Ali reading this and thinking about approaching a junior in Pakistan — the deals that close are the ones where both sides accept that a junior concession is not a producing mine, and price the risk honestly. The ones that don't close are the ones where someone's pretending otherwise.

What's the tonnage you're actually trying to secure, and over what horizon?