Infinity Lithium extends supply deal with LG

ASX-listed Infinity Lithium Corporation has extended a Memorandum of Understanding with South Korean lithium-ion battery manufacturer LG Energy Solutions for the supply of lithium hydroxide from its planned San Jose project in Spain.

The expansion follows a 2021 deal that permits LG the first rights to 10,000 tonnes of product per year and grants the parties additional time to hammer out a long-term offtake agreement. The deal will mature on 2 December 2023.

The original MOU was based on the supply of lithium hydroxide for an initial period of five years. As per the terms of the deal, the companies have the option to extend the agreement for a further five years and the purchase price will be based on the market rate of the commodity.

Infinity Lithium’s proposed San José lithium project is positioned near the town of Cáceres in Spain and boasts one of Europe's leading JORC-compliant hard-rock lithium deposits with a total indicated and inferred resource base of 111 million tonnes at 0.61 per cent lithium oxide.

The company is also looking to build a nearby lithium chemical conversion plant to process its massive lithium inventory into battery-grade lithium hydroxide.

A 2021 scoping study which evaluated an integrated underground mining operation at San José delivered a robust set of numbers including a pre tax net present value of US$811 million, a pre tax internal rate of return of 25.7 per cent and a payback period after just 3.2 years after first production.

In addition, the study projects a whopping US$7.9 billion in revenue from the production of about 19,500 tonnes of battery grade lithium hydroxide annually over a 26-year period. The company says the study has underlined the potential of an underground mining operation as opposed to the original open pit design.

The operation’s development was put on hold last year over concerns it was too close to the Cáceres township and the company shifted to an underground model to fire the project back to life.

Part of the program includes the underground extraction of lithium through a portal that leads to the lithium deposit at the projected processing hub – a move the company says will deliver no visual, audible or vibration-based impacts to the Cáceres township. In addition, Infinity argues its workstream removes any threats to the zone’s water table.

Infinity’s Chief Executive Officer and Managing Director Ryan Parkin previously stated the company welcomed the chance to provide lithium hydroxide material to a flagbearer in the lithium-ion battery space and LG certainly appears to tick that box.

Perth-based Infinity has tipped San Jose to play a massive part in Europe’s evolution as a vertically integrated lithium-ion battery supplier and says the delivery of battery-grade lithium hydroxide is essential to guaranteeing the long-term creation of lithium-ion batteries.

Europe is also facing unprecedented demand for electric vehicles and recent studies by global management consultancy group McKinsey & Company suggest the nation’s pro-ev regulations could lead to a massive automotive revolution. The company believes by 2030 EVs in Europe could account for at least a third of all light vehicles on the road.

With electric vehicle uptake in Europe surging, Infinity could find itself with the right tools in the right part of town with its San José lithium project in Spain.

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