First Phosphate Enters MOU For 6,000 Tonnes Per Year Of LFP Cathode Active Material, LFP / LFMP Tech
FULL DISCLOSURE: This is sponsored content for First Phosphate.
First Phosphate (CSE: PHOS) continues to work its way into the North American battery supply chain, announcing this morning that it has signed another memorandum of understanding.
The latest MOU relates to a license for technology to produce lithium iron phosphate, and lithium iron manganese phosphate cathode active material, which it is to acquire from Ultion Technologies. The tech for LFP cathode active material is proven, and currently utilized at two production facilities ranging in size from 10,000 tonnes to 50,000 tonnes of annual capacity, while the tech for LFMP is currently under development, with a smaller production profile. At current prices, 50,000 tonnes of LFP CAM is estimated to be valued anywhere between US$625 million and US$1,250 million.
Ultion Technologies, based in Las Vegas, Nevada, is focused on the commercialization of battery materials, cells and packs, with its first facility for lithium ion cell and pack production slated to open in 2025. The initial facility is expected to have 1GWh of cell production, with additional facilities being considered in the US, Mexico, and Canada.
The license is non-exclusive and perpetual in nature, with no royalties attached. An exclusive right is eligible to be acquired for the LFMP technology.
READ: First Phosphate Enters MOU With Lithium Australia For Joint Development Of LFP Facilities
Key to the memorandum of understanding is an offtake arrangement that will see First Phosphate provide an initial 2,000 tonnes per annum of LFP CAM to Ultion for its battery cell manufacturing business for specialty products. Initial production from Ultion is slated to amount to 500 tonnes per annum in 2025, growing to 2,000 tonnes by 2029. Addition cell production partners are also expected to be added to the demand mix, with at least two additional facilities being considered at the moment, which would bring demand to up to 6,000 tonnes per year of LFP CAM offtake from First Phosphate.
LFP CAM, as per First Phosphate, has a current price range of between $12,500 and $25,000 per tonne based on recent transactions.
“The agreement is important to the Company because it provides proven, commercial-grade LFP production technology as well as offtake into the LFP CAM specialty products segment of the market. We are building our entry into LFP CAM production in careful and systematic manner. Access to various LFP production technologies reduces our technology risk and allows us to diversify industry exposure by servicing various markets and various client needs,” commented First Phosphate CEO John Passalacqua.
As part of the transaction, Ultion is to provide assistance with equipment acquisition and install, engineering support, design, start up, and training.
The arrangement, together with the arrangement entered into with American Battery Factory earlier this year, provides the company with total minimum offtake potential of 46,000 tonnes of LFP CAM beginning in 2026. The deal also follows an MOU entered into last week with Lithium Australia Limited (ASX: LIT), which outlines the potential development of an LFP and LFMP CAM manufacturing plant in North America, which would use purified phosphoric acid provided by First Phosphate, and lithium from a spodumene offtake arrangement Lithium Australia has with Charger Metals and Rio Tinto at the Lake Johnston Lithium Project.
The memorandum of understanding with Ultion is valid for a period of one year, or until a definitive agreement is entered into between the two parties, whichever comes first.
First Phosphate last traded at $0.405 on the CSE.
FULL DISCLOSURE: First Phosphate is a client of Canacom Group, the parent company of The Deep Dive. Canacom Group is currently long the equity of First Phosphate. The author has been compensated to cover First Phosphate on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
