Northern Territory lithium mine developer Core Lithium (ASX: CXO) has defied soft markets to secure a non-binding term sheet with Swiss metal trader Transamine for the five-year supply of 50,000 tonnes annually of spodumene concentrate from its 100%-owned Finniss lithium project, near Darwin.
The offtake agreement revealed yesterday was the latest piece of the puzzle to fall into place for the Stephen Biggins-led Core and came just hours before the company placed its shares, at an 18-month high of 6¢, into a trading halt pending a capital raising.
Details of the capital raising are expected to be announced as early as Monday.
The raising will cap a period of intense activity by Core as it readies Finniss for a final investment decision (FID) in the second half of this year.
Core’s Finniss project, being advanced out of the spotlight of an Australian lithium industry dominated by producers in Western Australia, is regarded as one of the country’s most capital efficient and lowest-cost spodumene opportunities, covering the Bynoe pegmatite field within 25km of Darwin’s port.
Core last month announced that the NT Government had signed off on Finniss’ mine management plan, completing the company’s push to have all regulatory approvals in place to be able to commence construction and then operation of the Territory’s first lithium project.
Mr Biggins has made no secret of the fact he wants Core to be construction-ready by late this year. Approval of the mine management plan and yesterday’s Transamine offtake news are significant steps toward achieving a shovel-ready state for the $73 million mine development.
An updated feasibility study for Finniss is due to be completed this quarter and will incorporate an upgraded mine plan, based on a new increased mineral resource courtesy of a highly successful extension drilling program late last year.
The aspiring lithium miner’s run of positive outcomes has garnered considerable traction in the marketplace and resulted in Core’s share price jumping from levels as low as 1.4¢ two months to 6¢ by the time the stock was placed in the pre-raising halt yesterday. Core’s shares have not closed this high since December 2018.
Core said yesterday the memorandum of understanding (MOU) with Transamine would pave the way for a binding offtake agreement to be agreed later in 2020. The company is also talking with Transamine about a potential finance facility.
The latest offtake agreement, together with an existing binding offtake agreement with China-based Yahua for 75,000tpa, would see the company with confirmed purchasers for 125,000t of Finniss’ annual production of 175,000t of spodumene concentrate.
“Transamine, among other existing and prospective offtake partners, has recognised the excellent prospects for Core Lithium to become an efficient and reliable supplier of high-quality spodumene concentrate from Darwin, with the support of the Northern Territory Government,” Mr Biggins said.
“With low capex, excellent grades and naturally competitive operating costs of the project close to port, we are more confident than ever that the Finniss Lithium Project will be front of the line of new global lithium supply as EV manufacturing recovers post COVID-19.
“We are encouraged by the ongoing confidence in lithium demand and project support despite the current challenging environment as we progress towards construction, commissioning and production.”
The pace of discussions and negotiations with other offtake partners and Finniss project financiers picked up following the NT Government’s sign-off of the mine management plan and Core says it is “actively negotiating” with potential purchasers of the remainder of Finniss’ forecast output.
Core also recently applied to a new Northern Territory Government initiative, the NT Local Jobs Fund, a $89 million co-investment fund to support economic projects and help high growth potential Northern Territory businesses to increase exports both nationally and internationally.
