Pilbara Signs Binding Off-Take And Downstream Processing Agreements With Major Chinese Lithium Chemicals Company
Pilbara Minerals Limited (ASX:PLS) announced that it signed its first major binding Off-take Agreement for its 100%-owned Pilgangoora Lithium- Tantalum Project in Western Australia.
Pilbara Minerals Limited (ASX:PLS) announced that it signed its first major binding Off-take Agreement for its 100%-owned Pilgangoora Lithium- Tantalum Project in Western Australia. The Off-take Agreement, which has been signed with a leading Chinese lithium chemicals company, is for the supply of 140,000tpa of 6% chemical grade spodumene concentrate over a six-year period from Q1 2018, with the option to extend for a further four years.
As quoted in the press release:
The binding Off-take Agreement converts the first of a series of non-exclusive MOU’s signed by Pilbara with its prospective customer base last year. Additional off-take agreements are currently at an advanced stage of negotiation, with further announcements expected in the short term that will largely cover the balance of Pilgangoora’s anticipated initial output of over 300,000tpa of chemical spodumene concentrate.
The off-take party is a leading Chinese producer of lithium carbonate (Li2CO3) and lithium hydroxide monohydrate (LiOH.H2O). It is therefore a key supplier of lithium products and materials to the fast-growing lithium-battery industry in China which is also renowned for its product quality.
The signing of this landmark off-take deal – which is the first binding sales agreement to be secured by the Company – represents a major step forward for the Pilgangoora Project and a significant vote of confidence in Pilbara’s ability to rapidly bring Pilgangoora on stream to meet the burgeoning demand for chemical grade spodumene concentrate as the lithium industry in China gears up for a transformational phase of growth.
Pilbara Minerals Managing Director, Ken Brinsden, stated:
This is Pilbara’s first binding off-take agreement – a huge milestone for the Company and an exciting development for the rapidly growing lithium industry in Australia. This crystallises the strong relationship we have developed with key off-takers over the past year, and cements a long-term partnership with one of the significant players in China’s rapidly evolving lithium chemicals and battery industry.
It also underpins the financial and commercial fundamentals of the project, providing us with certainty around a large portion of our product sales and imparting significant momentum to our product marketing process, as we look to finalise additional binding off-take agreements in the coming weeks and months.
We are very excited by the downstream processing opportunity contemplated by the binding MOU signed as part of this agreement.
The ability to manufacture high-value battery-grade lithium products through downstream processing has the potential to deliver significant additional value for Pilbara in the years ahead, with global demand for lithium-ion batteries expected to experience unprecedented growth over the coming decades.
The equity investment also represents a significant vote of confidence in the Company, the Project and our development strategy, and we look forward to welcoming them as a shareholder. The proceeds from this investment will further strengthen our balance sheet as we move rapidly to complete the Definitive Feasibility Study on the Pilgangoora Project by mid-August and complete the project financing process in the current half.
This is a landmark agreement and a major milestone for the Company. Pilbara and the Pilgangoora Project are set to become globally significant players in the lithium raw materials industry.