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Core Lithium expands Finniss lithium concentrate offtake deal with Yahua by 50%

The offtake agreement includes a floor price, guaranteeing a robust operating margin and revenue for the first 2 years.
signing a deal
Definitive feasibility study for the Finniss project is expected in the next few weeks

Core Lithium Ltd (ASX:CXO) has expanded its existing binding lithium offtake agreement with Yahua for the Finniss Lithium Project near Darwin in the Northern Territory.

The offtake agreement is with one of China’s largest lithium hydroxide and carbonate producers, Yahua, a wholly owned subsidiary of Sichuan Yahua Industrial Group Co Ltd (SHE:002497).

READ: Core Lithium’s drilling intersects high-grade lithium mineralisation ahead of Finniss DFS

Core managing director Stephen Biggins said: “The signing of the binding offtake agreement with Yahua for the Finniss Lithium Project is another significant milestone for Core, and we are delighted to further strengthen our strategic relationship with one of our largest shareholders.

“The offtake agreement underscores the strong relationship Core has developed with customers and high-quality chemical converters in Asia, who are suppliers into the fast-growing lithium battery materials sector.

“Additionally, the strengthened terms further de-risks our development plans and gives substantial clarity on project funding as we embark on our plan to rapidly transition into production.”

Finniss Lithium Project

The offtake agreement is for the supply of lithium oxide concentrate from the Grants and BP33 lithium deposits until November 30, 2023.

As part of the agreement, Core has granted Yahua a first right of refusal over lithium oxide concentrate offtake produced from the lithium deposits up to the greater of 300,000 tonnes or 50% of the forecast production for any calendar year.

The offtake agreement ends on the latter of Core having supplied 300,000 dry metric tonnes of lithium oxide concentrate to Yahua, or 30 November 2023, and may be extended by mutual agreement between Core and Yahua.

Importantly, the deal provides for attractive pricing linked to the market for 6% FOB (free on board) spodumene concentrate and contains an agreed price floor and ceiling for the first two years, ensuring Core’s operating margin is protected during the commissioning and capital payback period.

READ: Core Lithium grows Finniss global resource to 8.85 million tonnes with upgraded Carlton estimate

The offtake deal accounts for about 40% of the Grants and BP33 lithium deposit production over the life of those mines, underpinning its production profile and providing great confidence to Core to fast-track development of the mine.

The offtake agreement comes ahead of Core completing the Definitive Feasibility Study (DFS) for Finniss, which is expected to be released in the next few weeks.

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