Core Lithium Ltd (ASX:CXO) has surged on news that the company’s largest shareholder and offtake partner, China’s Sichuan Yahua Industrial Group, has signed a deal to supply battery-grade lithium hydroxide to US electric vehicle manufacturer Tesla Inc (NASDAQ:TSLA) over the next five years.
This was outlined by Core in response to a query from the ASX as shares were as much as 45% higher to 21 cents intra-day, just shy of the 21.1 cent record set when the company listed in February 2011.
Since December 24 shares have more than doubled from 8.3 cents while the company’s market cap currently sits at approximately $144.7 million.
Volumes have also increased since November 2020 with more than 165 million changing hands today.
Finniss offtake agreement
It is expected that Core’s near construction-ready Finniss Lithium Project in the Northern Territory will be a key source of spodumene concentrate for Yahua to fulfil its mandate with Tesla and other customers in the future.
Yahua currently holds a three-year, 75,000 tonnes per annum offtake agreement with Core.
The Finniss Lithium Project is Australia’s most advanced new lithium project on the ASX and places Core Lithium at the front of the line of new global lithium production.
This project is near shovel-ready and approved by government to commence construction, mining and production of high-quality lithium concentrate.
It is also one of the most capital-efficient lithium projects in Australia and has arguably the best logistics chain to markets of any Australian lithium project.
The project lies within 25 kilometres of port, power station, gas, rail and one hour by sealed road to workforce accommodated in Darwin and importantly to Darwin Port - Australia’s nearest port to Asia.
In its response to the ASX, the company also noted that analysts have recently reported that lithium prices in China are increasing from 2020 lows and global electric vehicle sales are reaching record highs in recent months.
Strong ongoing interest
It stated: “Core Lithium is the most advanced new Australian lithium developer on the ASX and there are very few advanced Australian lithium projects for investors to build exposure to increasing lithium prices.
“Core has further advised the market, on an ongoing basis, that the company is receiving interest from new lithium parties for additional binding offtake and customer project finance agreements for the company’s Finniss Lithium Project."