Near term lithium producer Neometals (ASX:NMT) has expanded the sales offtake arrangements from its Mt Marion Project, where construction is underway with partner and operator Mineral Resources (ASX:MIN).
Neometals is a beneficiary of the rising demand for lithium from an anticipated increase in need for lithium, chiefly for use in Li-ion batteries within the Electric Vehicle and Energy Storage industries.
Under an initial agreement, Ganfeng Lithium Co. agreed to take-or-pay 100% of the 6% Li2O, chemical grade spodumene concentrate produced from the Mt Marion project.
With testwork demonstrating an additional spodumene product can be generated through the addition of a flotation circuit to the current beneficiation plant, Ganfeng has agreed to expand the scope of the offtake arrangements to take-or-pay an additional 80,000 tonnes per annum of spodumene concentrate of between 4% and 6% Li2O content.
First shipment from Mt Marion could be as early as Q4 2016 after positive studies and offtake agreement executed.
Neometals has a 45% stake, Mineral Resources 30% and China’s 2nd largest lithium company Ganfeng holds 25% of the project.
With around $30-32 million held in cash reserves, Neometals is well placed to benefit from a timely path to production at Mt Marion.
However, the downstream processing lithium hydroxide JV project with Mineral Resources could be an even large plum for investors as it returned very strong PFS metrics including an IRR of 94% and cash flow generation of US63 million a year.
A go ahead for that is likely in 2017, enough time for the Mt Marion project to ride the lithium wave.
Proactive Investors is a global leader reporting financial news, media, research and hosts events for listed emerging growth companies and investors across four continents.