Anson Resources Ltd (ASX:ASN, OTCQB:ANSNF) has completed its landmark negotiations with LG Energy Solution by signing a binding offtake term sheet, which the company says is a strong market endorsement of its Paradox Basin Lithium Project in Southern Utah, USA.
Five-year agreement
The cornerstone term sheet, facilitated through Anson's wholly-owned subsidiary A1 Lithium, sets out an agreement for the annual supply of 4,000 dry metric tonnes of battery-grade lithium carbonate and is set to kick off in 2027.
This initial five-year agreement, with an option for a five-year extension, represents around 40% of the project's start-up production capacity, estimated at around 10,000 tonnes per annum.
The pricing structure for the lithium carbonate will be determined by a formula-based mechanism, which references market prices for the battery-grade material.
Investors have welcomed the deal with ASN shares as much as 19.05% higher in ASX trading intra-day to A$0.125.
Global leader in battery technology
LG Energy Solution, a global leader in lithium-ion battery technology for various applications, including electric vehicles and energy storage systems, operates eight facilities across North America.
This partnership aligns with LG's expansion strategy and its commitment to a diversified customer base, including top-tier original equipment manufacturers (OEMs).
The execution of the offtake agreement follows the completion of major permitting milestones and the successful operation of Anson Resources' Sample Demonstration Plant.
The final offtake agreement is contingent upon Anson Resources' final investment decision, the commencement of commercial production and product qualification by LG Energy Solution.
Moreover, Anson Resources is progressing negotiations with other potential tier-one global customers, aiming to secure 80-90% of its initial production under long-term agreements.
These talks complement the company's exploration efforts in the Paradox Basin, where ongoing test work suggests it could host one of North America's largest lithium resources.
Anson’s project is being conducted to exacting environmental, social and governance (ESG) standards, using advanced lithium extraction technologies that significantly reduce water usage compared to traditional methods.
Unstoppable paradigm shift
Anson Resources executive chair and managing director Bruce Richardson said: “Anson has recognised the unstoppable paradigm shift in the US supply chain for electric vehicle battery materials and the key role that Korean and Japanese battery manufacturers are playing.
“The Inflation Reduction Act and other US policy initiatives have resulted in significant investment in new battery manufacturing in North America to meet the continued growth in demand for electric vehicles in the US.
“This shift in manufacturing investment has led to an increased demand for lithium produced in the US, not only to shorten supply chains geographically but also increase US content of electric vehicle batteries and electric vehicles, to meet IRA incentive requirements.
“Anson identified this change, targeted its offtake marketing activities to the companies that have made these investments into North America and in particular, the US where Anson’s development work in the Paradox Basin in Southern Utah is strategically positioned.
“We are delighted to have reached agreement with LG Energy Solution allowing us to execute our first binding offtake term sheet for at least 40% of our production.
“This establishes the foundation for a long-term partnership and we are proud that we will be supplying US-made lithium from the Paradox Basin to LG Energy Solution, a respected global leader in the lithium battery value chain, building out the largest battery manufacturing capacity in the US.”