Core Lithium Ltd’s off-take agreement and equity stake with Ganfeng are now unconditional

Receipt of Chinese regulatory approvals is the final condition of the deal and follows Core’s final investment decision for the Finniss Lithium project.

Core Lithium Ltd (ASX: CXO) has taken another key step on its way to becoming Australia’s next lithium producer with a binding offtake agreement with a now unconditional subsidiary of Jiangxi Ganfeng Lithium Co, Ltd.

This follows Ganfeng obtaining all necessary regulatory approvals in China.

The agreement covers the annual supply of 75,000 tonnes of Li2O spodumene concentrate over four years from the Core Finniss project near Darwin in the Northern Territory of Australia.

Follows FID

It also includes an associated A $ 34 million share issue and comes just after Core’s board of directors made the final investment decision to begin development of the wholly owned project.

Core is fully funded for the development of Finniss until the first production of lithium concentrate, which is scheduled for the fourth quarter of 2022.

World-class shareholder and client

Core Lithium Managing Director Stephen Biggins said, “I am delighted that the conditions underlying the purchase and investment in Ganfeng shares have now been met and I welcome Ganfeng as Core shareholder and world-class customer.

“We are looking forward to working closely with Ganfeng to realize our Finniss Lithium project.

“Following the positive financial investment decision of the Board of Directors for Finniss”, our goal now is to begin construction and safely deliver the next lithium operation to Australia in accordance with our lithium concentrate production schedule. premium quality by the fourth quarter of 2022. “

Higher shares

The news saw the company’s shares jump 8.7% to an intraday high of A $ 0.625, while the pre-opening market cap was around A $ 892 million.

Ganfeng’s total levy is equivalent to 300,000 dry metric tonnes and the agreement provides for market-benchmarked pricing for 6.0% Li2O spodumene concentrate, adjusted for actual Li2O content, and includes an agreed floor price.

Add to Yahua Levy

This is in addition to the previously announced binding offtake agreement with Yahua for 75,000 tonnes per year over four years.

Together, these agreements represent approximately 80% of Finniss production in the first four years of mine life.

The agreement with Ganfeng begins on the effective date of commercial production at Finniss and ends on the date four years after the start of supply. It can be terminated by Ganfeng if the effective date of commercial production does not come before December 1, 2023.

Now unconditional

This direct debit is now unconditional following satisfaction of the conditions precedent:

  • Chinese regulatory approvals;
  • Approval of the placement of shares by the reference shareholders (received on September 17, 2021); and
  • Core entering into binding agreements for minimum total funding of at least A $ 80 million, which was satisfied with an institutional placement in August 2021.

The company has now received AU $ 34 million in funds from Ganfeng and will soon complete its subscription to 100,591,715 fully paid common shares of the company.

Upon completion of the equity investment, Ganfeng will own approximately 6.1% of Core’s shares.

The proceeds from this investment will contribute to the development of Finniss.

Core’s financial advisor for this transaction is Jett Capital Advisors LLC.

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