First Graphite (FGR) has signed a sales agreement with the Sri Lankan Government owned Kahatagaha Graphite Lanka Limited (KGLL) to purchase 100% of the Kahatagaha premium grade vein graphite for a period of two years according to Australian Resources.

“Directors are pleased that KGLL selected FGR as its exclusive partner for this agreement, particularly considering the number of other parties who have approached KLL in recent times and have been unable to secure such an agreement,” the company told the ASX.

“It is a reflection of the strong relationship that is building with the Sri Lankan Government, based on FGR’s commitment to advancing Sri Lankan production.”

The agreement, which specifies the quantity, quality and pricing of the material to be purchased by FGR, will see the company work with the Government-owned mine to provide assistance for value adding downstream opportunities for KGLL’s graphite.

FGR, which is developing its own graphite mines in Sri Lanka, said its development plans have been derailed by the challenging ground conditions in the initial excavation of the shafts.

The company said it was working to address the issue and that it is confident that saleable production from its own mines will soon be available.

Managing Director Craig McGuckin said the sales agreement with KGLL will ensure that there is a good supply of graphite through the commissioning and ramp up period without any interruption to the graphite initiative, the company’s primary source of growth going forward.

“FGR is very pleased to be associated with Kahatagaha Graphite Lanka Limited in a long term supply agreement,” he said.

“Kahatagaha has a long and proud tradition of having been supplier of high-grade Sri Lankan graphite. That FGR was selected to enter into this long term agreement is a sign of the regard the company is held in the Sri Lankan industry.”