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Core Lithium signs MOU for new offtake deal and secures $1 million at-market placement

If they proceed, offtake agreements in place will represent around 85% of the Finniss project's proposed annual production of 175,000 tonnes.

Core Lithium Ltd - Core Lithium signs new offtake agreement and launches at-market placement
Xinfeng also has the potential to participate in financing for the Finnis Lithium Project

Core Lithium Ltd (ASX:CXO) (OTCMKTS:CXOXF) has signed a non-binding MOU with a leading lithium industry player for the annual supply of 20,000-30,000 tonnes of spodumene concentrate for three years from Finniss Lithium Project in the Northern Territory.

If it proceeds, the non-binding term sheet with Tangshan Xinfeng Lithium Industry Co Ltd will supplement Core’s existing binding offtake agreement with Yahua for 75,000 tonnes annually and a non-binding MOU with Transamine Trading for 50,000 tonnes.

85% of planned capacity

These offtake agreements represent around 85% of Core’s current planned annual production capacity of 175,000 tonnes.

Signing of the MOU with Xinfeng is the result of engagement by Core with several potential offtake parties and project financiers, accelerated since the company received the necessary regulatory approvals for mining and production and the recent $5 million finance facility offer from the NT Government.

In parallel with the MOU, Core is completing a $1 million strategic share placement with Xinfeng.

Long-term demand

The Xinfeng offtake term sheet reinforces the lithium market’s confidence in Finniss and the long-term demand fundamentals of lithium beyond the challenges brought about by the COVID-19 pandemic.

Core is receiving increased interest from new lithium parties and is close to completing additional binding offtake and customer project finance agreements.

Combined with the recently announced much larger mineral resource and subsequent Finniss mine life extension, the company is assessing the potential to increase production capacity and capture the benefits of increasing revenues.

Core continues to negotiate with several parties for the remaining production from Finniss.

At-market placement

The term sheet with Xinfeng paves the way for a binding offtake agreement and also holds the potential for project finance, subject to due diligence by Xinfeng and a final investment decision (FID) for Finniss by Core.

In parallel with the MOU, the company is completing a $1 million strategic share placement with Xinfeng which is escrowed for 12 months and is priced at-market to avoid dilution. The price is 4.6 cents per share.

These funds will be utilised to accelerate the Finniss project optimisation.

Quick facts: Core Lithium Ltd

Price: 0.063 AUD

ASX:CXO
Market: ASX
Market Cap: $62.64 m
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