Lithium Ionic (TSXV: LTH) has cleared a major hurdle on its path to production, securing long-term offtake agreements with two of the lithium industry’s heavyweights.
The company announced Wednesday that it has signed five-year binding take-or-pay agreements with Sichuan Yahua Industrial Group Co. and Grand Chen Resources. Under the terms, Lithium Ionic will supply a combined 170,000 tonnes of spodumene concentrate annually from its flagship Bandeira project in Brazil.
The deal is a significant de-risking event for the company, providing both a guaranteed buyer and a financial safety net. The agreements include a price floor of US$1,000 per tonne of 6% spodumene concentrate with no price limit, protecting the company against potential market downturns while allowing it to capture the full upside of spot price rallies.
“We are very pleased to be partnering with Yahua Group and Grand Chen—two highly capable and globally established participants in the lithium supply chain,” said Blake Hylands, CEO of Lithium Ionic. He noted that the partners are Tier-1 suppliers to major electric vehicle manufacturers, including BYD.
In exchange for the offtake agreements, Lithium Ionic has secured a $20 million combined pre-payment facility, which will be funneled directly into the Project’s advancement as it nears a formal construction decision.
Bandeira, located in Brazil’s increasingly busy Lithium Valley, is shaping up to be a low-cost contender in the sector. A recent feasibility study outlined an 18.5-year mine life with a post-tax net present value (6%) of US$1.45 billion, and initial capital costs of just $191 million. By securing these buyers now, the company has effectively banked its future output, making it much easier to court lenders for the remaining construction capital.
Lithium Ionic last traded at $0.97 on the TSX Venture.
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