PERTH (miningweekly.com) – Lithium developer Lake Resources has reached a conditional framework agreement (CFA) with electric vehicle battery developer SK On for the supply of up to 25 000 t/y of lithium from the Kachi project, in Argentina, and a potential 10% stake in Lake through a strategic investment.
The CFA with SK On comes just days after Lake struck a similar deal with commodity supply solution provider WMC Energy.
“The CFA delivers a long-term strategic agreement with SK On, one of the world’s pre-eminent lithium-ion battery producers with a major growing presence in the North American market,” Lake executive chairperson Stu Crow said.
He said the agreement strengthens Lake’s long term shareholder base and adds to the equity component required for the drawdown of debt facilities for project development.
The CFA with SK On will cover 50% of Kachi’s planned lithium production, and will cover an initial five-year term, plus the option for a further five years. The offtake will be priced on an agreed-upon market price formula, based on the average quoted price in the quotation period.
The CFA is subject to a number of conditions, including a positive definitive feasibility study (DFS) for Kachi, positive results from the Lilac demonstration plant, financial due diligence, and product specifications.
Lake’s newly appointed CEO and MD, David Dickson, said the CFA cements the ability of Lake to scale up environmentally responsible production and also affords SK On the opportunity to participate in Lake’s other projects as they move to development to ensure a supply of high-quality lithium products are available to SK On.
“SK On is very pleased to execute this CFA with Lake, a clean lithium developer, which can allow SK On to secure a stable lithium supplier for its US supply chain,” SK On VP Jinsuk Ryu said.
“Lake fits particularly well with SK On's environmental and social governance policy as it utilises environment-friendly direct lithium extraction technology for production of lithium. With this CFA, both parties will strengthen mutual partnership to advance opportunities to secure sustainable sources of raw materials in the future,” she said.
A previously completed updated prefeasibility study estimated that the Kachi project could produce 25 500 t/y of lithium carbonate over a mine life of 25 years, with capital costs estimated at $540-million.
The company said earlier this year that the DFS would consider a production case of 50 000 t/y, given the increased demand from potential offtakers. The DFS is due for completion in the third quarter of this year.
Edited by: Creamer Media Reporter
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