Pilbara Minerals Ltd (ASX:PLS) has finalised a binding lithium off-take deal with Great Wall Motor Company, one of China’s largest automotive manufacturers.
The Chinese company has also completed a $28 million equity investment in Pilbara with the proceeds contributing towards completion of Stage 1 of the Pilgangoora project development.
Moreover, the deal will underpin Pilbara’s Stage 2 expansion of its Pilgangoora Lithium-Tantalum Project located in Western Australia.
Great Wall’s off-take comprises 75,000 tonnes per annum (tpa) of spodumene concentrate over an initial 5-year term, with the ability to extend for up to a further 10 years via two 5-year options.
Following the allotment, Great Wall will indirectly own circa 3.47% of the current issued shares in Pilbara.
The deal represents the first direct investment by an automobile manufacturer into an Australian upstream supplier of lithium raw materials.
The Pilgangoora deposit is one of the world’s largest lithium-tantalum hard rock deposits, with a total resource of 156.3 million tonnes at 1.25% lithia.
Great Wall has the opportunity to secure a further 75,000 tpa of Stage 2 off-take, for a total volume of 150,000 tpa, by providing Pilbara with US$50 million of debt financing for its Stage 2 expansion.
Following the completion of Stage 2 expansion, Pilbara’s targeted total production of chemical grade spodumene concentrate is expected to exceed 800,000 tpa.