ASX-listed Argosy signed the strategic agreement with Chinese battery manufacturer Quingdao Qianyun High-tech New Material.
Shares of lithium junior Argosy Minerals (ASX:AGY) jumped more than 50 percent on Thursday (August 17) after the company signed a strategic deal with a Chinese battery manufacturer.
The transaction between China’s Quingdao Qianyun High-tech New Material and Argosy includes AU$26.4 million to be received upfront through an equity placement and prepayment under a one-year preliminary offtake agreement.
In exchange, ASX-listed Argosy will provide an agreed-upon amount of battery-grade lithium carbonate equivalent (LCE) during the first year of production at its Rincon lithium project in Argentina.
Argosy Managing Director Jerko Zuvela called the deal a “company transforming event,” and said Argosy will fast track the development of Rincon. The company is targeting LCE production in early 2018.
“On completion of this transaction, Argosy will have substantial funding (together with its technical and processing expertise), plus a strategic shareholder and customer in Qinyuan to fully develop and maximise the potential of Rincon and exploit the insatiable demand growth of the battery grade LCE market,” he said.
The upfront funds exceed the Stage 2 development expenditure budget for Rincon, which is located in the “lithium triangle” — host to the world’s largest lithium reserves. Argosy also has interests in the Mina Teresa and Pocitos lithium projects in Argentina.
On top of the deal mentioned above, Qianyun and Argosy have signed a separate five-year offtake agreement for 1,000 tons per year of LCE from years two to six of production at Rincon.
In addition, the companies will establish a joint venture agreement to consider the acquisition and development of lithium project opportunities in China during the next two years.
As mentioned, Argosy’s share price jumped 53.95 percent after the announcement, closing in Sydney at AU$0.12. Argosy’s share price is up more than 300 percent year-to-date.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.