Australia-based battery supplies firm Liontown Assets Restricted entered right into a legally binding gross sales and buy time period sheet with electrical automobile producer Tesla for the provision of spodumene focus. The settlement is for the provision of as much as 150,000 dry metric tonnes (DMT) every year of spodumene focus to be produced at Liontown’s Kathleen Valley Lithium Undertaking in Western Australia and is predicted to start in 2024, representing roughly one-third of the challenge’s start-up SC6.0 (spodumene focus 6%) manufacturing capability of ~500 ktpa.
The settlement with Tesla is the second offtake association secured for Kathleen Valley following the foundational offtake association with LG Vitality Options. Along with the LG Vitality Options association, which means that greater than half of Liontown’s deliberate manufacturing is now lined by long-term agreements with high-quality prospects.
Kathleen Valley is a brand new, globally important, lithium growth challenge situated 680 km north-east of Perth in Western Australia’s premier mining district. Underpinned by a world-class lithium deposit with a Mineral Useful resource Estimate of 156 Mt at 1.4% Li2O and 130ppm Ta2O5, Kathleen Valley is forecast to initially produce ~500 ktpa of SC6.0 spodumene focus increasing to ~700 ktpa.
The challenge additionally has an built-in and value-adding ESG focus with 60% renewable energy at start- up and a powerful working relationship with the standard homeowners of the land (the Tjiwarl). A landmark Native Title Settlement was entered into with the Tjiwarl in November 2021, which offers the framework for collaboration in the course of the growth and operation of the Undertaking.
Main development of the A$473-million (US$340-million) challenge is scheduled to start by This autumn CY2022 following the completion of a optimistic Definitive Feasibility Research (DFS) in late 2021 which outlined a post-tax NPV8 (web current worth utilizing a reduction price of 8%) of A$4.2 billion (US$3 billion) and IRR of 57%. The Ore Reserve helps an preliminary ~23-year mine life, with Liontown focusing on additional expansions.
Liontown is well-capitalized to forge forward with growth of Kathleen Valley following a A$450-million (US$323 million) fairness elevating accomplished in late 2021. The corporate can be evaluating a pathway by way of the event of a value-maximizing Lithium Hydroxide Downstream Processing Facility in Western Australia, which is presently on the Pre-Feasibility Research stage.
Kathleen Valley Undertaking location, infrastructure, current mines, and regional geology.
Liontown has been disciplined in executing its offtake technique for Kathleen Valley, focusing on giant basis agreements which intention to ship diversification each by geographic location and buyer place within the international battery worth chain, whereas on the similar time retaining some capability to promote into the quickly rising spot market.
Underneath the settlement with Tesla, pricing is set by a formula-based mechanism linked to market costs for lithium hydroxide monohydrate. Utilizing in the present day’s market pricing, the contract phrases would ship an SC6.0 worth consequence for Liontown that’s higher than the pricing assumptions used within the DFS. However this, buyers ought to be aware that the pricing obtained by Liontown underneath the settlement with Tesla might be decided by market costs on the time of every cargo.
Liontown and Tesla will now work collectively to finish the negotiation and execution of detailed definitive agreements which should be accomplished and executed by 30 Could 2022. Liontown cautions buyers that there is no such thing as a assurance that the definitive agreements might be entered into by this date and in consequence, the Settlement could also be terminated until prolonged by mutual settlement of Liontown and Tesla.