Sigma Lithium Corporation (TSXV: SGML) announced this morning that it has signed a binding term sheet with LG Energy Solution. The agreement entails the company to provide lithium concentrate for the latter’s manufacturing of lithium-ion batteries for electric vehicles.
The offtake agreement between the two parties stipulates a six-year engagement on a “take or pay” basis. LG Energy will be purchasing 60,000 metric tonnes of 6% battery-grade sustainable lithium concentrate from the company in 2023, and 100,000 metric tonnes annually from 2024 to 2027.
“This offtake is perfectly aligned with our strategy of creating direct commercial relationships with the largest Tier 1 battery producers (who are the final end-users in the lithium supply chain), providing stability to our future cash flows,” said Sigma Lithium co-CEO Ana Cabral-Gardner in a statement.
As per the agreement, the two companies also agreed to negotiate each year an additional optional supply starting with 15,000 metric tonnes annually for 2022 and 2023, and 50,000 metric tonnes from 2024 to 2027.
The purchase price for the lithium concentrate will be floating and will be linked to the market prices for high purity lithium hydroxide.
Sigma Lithium last traded at $10.56 on the TSX Venture.
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