The Northern Territory will welcome Australia’s newest lithium producer in 2022 after fledgling miner Core Lithium secured a key offtake partner and $140 million to build the operation at Finniss over the next 15 months.
Shares in Adelaide-based Core (ASX: CXO) rallied to record highs this week, fetching as much as 41¢ per share after emerging from a trading halt with news that the company had secured a binding offtake agreement with China’s Ganfeng, one of the world’s largest lithium producers, for 75,000 tonnes per annum of spodumene concentrate over four years from the commencement of production at Finniss. Core’s share price closed the week at 36.2¢ per share.
The Ganfeng deal was sweetened with a $34 million equity investment in Core at an attractive 33.8¢ per share – a 10% premium to Core’s 10-day volume-weighted average price.
Combined with existing offtake partner Yahua’s commitment for 75,000tpa over the same period, Core has now allocated 80% of the first four years’ worth of production from Finniss.
“The offtake and equity investment by Ganfeng represents a transformational moment for Core,” managing director Stephen Biggins said.
“Ganfeng has a proven track record of investing in high-quality lithium projects across the world and of being a strong and supportive offtake partner.”
In parallel with the Ganfeng offtake and equity investment, Core also kicked off a $106 million capital raising this week in the form of a now-completed $91 million fully underwritten institutional placement, and a $15 million share purchase plan (both priced at 31¢ per share) which was opened up to existing shareholders on Friday.
Having successfully raised $40 million earlier this year, Core now has certainty of funding for the construction of Finniss, which is expected to commence before the end of the year.
It also gives Core added flexibility to continue exploring the wider Finniss region with the expectation of further growing the longer-term value of the project.
Assuming a final investment decision is made in the near-future and construction commences on time, Core has flagged first production at Finniss could come early as next year.
“We now have immediate certainty over Finniss Project funding and we remain on-track to commence construction activities within the 2021 calendar year, ahead of anticipated first production in late 2022,” Mr Biggins said.
The Finniss Project is already significantly de-risked, with all necessary government and environmental approvals secured to allow construction to begin.
The news comes as lithium stocks soar, with traditional safe haven commodities such as gold failing to attract the same investor interest it was six months to a year ago.
Research desks around Australia are amping up their “buy lithium” call-outs, with JP Morgan going so far as to increase its long-term spodumene price from US$650/t to US$850/t.
Adding to the mix Western Australian miner Pilbara Minerals’ (ASX: PLS) recent revelation that its first online auction of spodumene from its Pilgangoora lithium mine went for an astonishing US$1,250/t, it can no longer be ignored – the lithium market has dropped its 2019-2020 doom and gloom ‘just a phase’ persona.
The EV market is running hot, compounded by growing calls for industries across the world to commit to investing in the future net-zero targets they have set for themselves, and with long-term lithium supply worries continuing to loom, near-term producers like Core are now in the hot seat to capitalise on the global mandate to decarbonise.
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