Core Lithium Ltd (ASX:CXO) hit a new high after entering a legally binding Term Sheet with Tesla, Inc. for the supply of up to 110,000 tonnes of Li2O spodumene concentrate from the Finniss Lithium Project.
This is a four-year agreement, with pricing referenced to the market price for spodumene concentrate, subject to a price floor and ceiling.
The news comes just several months after CXO’s board took a Final Investment Decision to start the development of the wholly-owned Finniss Project near Darwin in the Northern Territory.
Shares were as much as 18.19% higher to A$0.975, a new record high with almost 110 million changing hands. The company's market cap is approximately A$1.39 billion.
First production due in 2022
Core’s Finniss Project is Australia’s newest and most advanced lithium project on the ASX, with first production on schedule for delivery by the end of 2022.
The Finniss Project places Core Lithium at the front of the line of new global lithium production.
Finniss has been awarded Major Project Status by the Australian Federal Government, is one of the most capital-efficient lithium projects and has an excellent logistics chain to markets.
The project is expected to provide high-grade and high-quality lithium suitable for lithium batteries used to power electric vehicles and renewable energy storage.
CXO is fully funded to deliver the project, which has started construction, through to first lithium concentrate production scheduled for Q4 this year.
Definitive product purchase with Tesla
The Term Sheet is subject to Tesla and CXO completing negotiations and execution of a definitive product purchase agreement by August 27, 2022.
This would see CXO start supplying product before July 31, 2023 (subject to extension by mutual agreement).
"The Term Sheet with Tesla is for the supply and delivery of up to 110,000 dry metric tonnes of spodumene concentrate over a term of four years. This adds to the previously announced binding offtake agreements with existing customers over four years,” Core Lithium managing director Stephen Biggins said.
“Subject to execution of a definitive agreement, Core’s supply to Tesla is scheduled to commence in 2H 2023 and will cease on the date that is four years after commencement of supply or until a total of up to 110,000 dry metric tonnes has been delivered.
“Core Lithium is thrilled to have reached this agreement with Tesla and looks forward to further growing this relationship in the years to come. Tesla is a world leader in electric vehicles and its investment in offtake and interest in our expansion plans for downstream processing are very encouraging.”
Core's strategy for Finniss includes a potential Stage 3 expansion based on a longer-term plan for the development of downstream lithium chemical processing in the Northern Territory.
Tesla has agreed, subject to execution of a definitive agreement, to provide additional support to Core to assist with the successful completion of its Stage 3 Expansion and the incorporation of Core's lithium chemical product into Tesla's supply chain.