Great Wall invests $28m in Pilbara Minerals

Pilbara Minerals has secured an offtake and $28 million equity deal with Chinese car maker Great Wall, effectively replacing a previous financial commitment from one of the aspiring miner’s other offtake partners.

Great Wall has committed to 75,000 tonnes per annum of spodumene concentrate from the second stage of Pilbara’s Pilgangoora lithium project, with options to extend the agreement by another 75,000tpa.

The agreement will run for an initial five-year term, with the option to extend by a further 10 years.

The extensions will be on the provision that Great Wall provides $US50 million of debt financing for Pilbara’s Stage 2 expansion at Pilgangoora.

As part of the offtake agreement, Great Wall has made a $28 million investment in Pilbara through the subscription of 56 million shares, with the proceeds to be used to complete Stage 1 of the project’s construction while providing financing for a definitive feasibility study on Stage 2.

The equity component of the offtake agreement replaces a previously planned $17.8 million subscription agreement in Pilbara by China-based offtake partner General Lithium, which fell over due to regulatory constraints.

However, General Lithium’s offtake commitment for 140,000tpa of Stage 1 production remains in place.

“This marks an important milestone for Pilbara and the Pilgangoora project and is a significant development for the rapidly evolving lithium-ion raw materials supply chain globally,” Pilbara managing director Ken Brinsden said.

“While this deal reflects the remarkable progress being made in China, we are also witnessing increasing interest from battery and automobile manufacturers outside of China looking to secure their future lithium requirements, in response to an increasing global market shift towards electric vehicles and off-grid storage.

“In conjunction with the rapid expansion in spodumene conversion capacity currently being rolled out in China to supply the battery market beyond electric vehicles, these themes highlight the fundamental demand for lithium, which comes at an opportune time for the company as we look to complete our Stage 1 development at Pilgangoora and pursue further growth via the Stage 2 expansion.”

Shares in Pilbara were 14.2 per cent higher to 62.5 cents each this morning.