Core Exploration (ASX: CXO) has signed a non-binding term sheet one of China’s largest lithium producers, Shandong RuiFu Lithium Co, to supply concentrate from its Finniss project near Darwin. The term sheet governs supply of up to 150,000tpa of lithium concentrate from Finniss to RuiFu, which has agreed a $US35 million pre-payment facility for Core and will take up a $A3 million share placement priced at 5c a share. RuiFu will control about 10% of Core.
HIGHLIGHTS
- Non-binding Term Sheet signed with Shandong RuiFu Lithium Co Ltd (“RuiFu”) a subsidiary of Shanghai-stock exchange listed Meidu Energy Co., Ltd providing for:
- Up to 150,000 tonnes lithium concentrate offtake per year from Core’s 100% owned Finniss Lithium Project;
- US$35 million conditional pre-payment facility to be provided by RuiFu; and
- Placement for approximately $3.0 million to RuiFu at 5 cents per share, resulting in RuiFu holding a 10% interest in Core.
- Ruifu is one of China’s largest lithium hydroxide and carbonate producers
- US$35M pre-payment from RuiFu, in addition to US$20M pre-payment from Yahua, expected to provide a non-dilutive finance solution to develop the proposed Grants mine and build the DMS concentrate plant
- PFS completed in June 2018 indicated total capital cost of A$53.5 million to develop the Grants deposit and DMS plant
- Core is currently completing a Feasibility Study for the development of the Finniss Lithium Project, targeting first deliveries in late 2019
- Core and Ruifu will now seek to establish Binding Agreements in the weeks ahead
Emerging lithium developer Core Exploration Ltd (ASX: CXO) (“Core” or the “Company”) is pleased to announce that it has entered into a non-binding term sheet with one of China’s largest lithium producers, Shandong RuiFu Lithium Co Ltd (“RuiFu”) to supply up to 150,000tpa of lithium concentrate offtake, and receive a US$35 million pre-payment facility for its 100% Finniss Lithium Project near Darwin in the Northern Territory, together with RuiFu making an investment of approximately $3.0 million in Core (“Term Sheet”).
The Term Sheet provides that Core and Ruifu intend to negotiate in good faith with the aim of entering into legally binding agreements that provide for each of the following:
- Lithium Concentrate Offtake
- Offtake of up to 150,000 dry metric tonnes (DMT) per annum of lithium concentrate produced from the Finniss Lithium Project (subject to Core’s contractual commitments to Yahua) for up to five years.
- The lithium concentrate grade must be between 5.0% and 5.5% Li2O
- US$35 Million Pre-payment Facility
- Pre-payment to Core up to US$35,000,000 of lithium concentrate to be purchased under the Offtake Agreement.
- Payments to be advanced to Core in stages as key development milestones are achieved.
- The Pre-payment Agreement will be conditional on Core resolving to proceed with mining at the Finniss Lithium Project and having all necessary approvals and permits to proceed, as well as other conditions typical in this type of greement
- Share Placement
- Placement of shares in Core at 5c to increase RuiFu’s shareholding to 10% of Core’s issued capital.
- Based on the current issued capital of Core, the Placement to RuiFu is expected to be in the order of $3.0 million (~60m new ordinary shares) for further development of Core’s lithium resources.
- The Placement will be undertaken under the Company’s issued authority under ASX Listing Rules 7.1 and 7.1A.
Commenting on this significant milestone, Core’s Managing Director, Stephen Biggins, said:
“This funding and concentrate supply Term Sheet with RuiFu, along with our existing prepayment agreement with Yahua, sum to US$55M in pre-payments, and has the potential to provide the funding solution for the relatively low capex required to get the Finniss Lithium Project into production.”
