Shares in Pilbara Minerals have surged on news the company has locked in a second offtake agreement for its Pilgangoora lithium project.
Shares in Pilbara Minerals have surged on news the company has locked in a second offtake agreement for its Pilgangoora lithium project.
Pilbara announced this morning it has signed an agreement with Chinese lithium carbonate producer Shandong Ruifu Lithium Co for the supply of crushed and unprocessed direct shipping ore from either Pilgangoora or the Lynas Find lithium project, which Pilbara is buying from Dakota Minerals.
Under the agreement, Pilbara will supply 1.9 million tonnes of run-of-mine 1.5 per cent lithia ore over a two-year term, with first deliveries targeted from July next year.
Pilbara will receive a $US10 million pre-payment as part of the deal to assist with funding project construction and start-up costs.
The payment will be made when major mine construction works at Pilgangoora begin.
The announcement sent Pilbara shares surging, up 10.9 per cent to 52.7 cents each at 10:30am.
Pilbara said it was also negotiating a further offtake deal with Shandong for the supply of spodumene concentrate from the end of 2018, when the unprocessed direct shipping ore offtake agreement ends.
“This concentrate offtake agreement will be in addition to the offtake agreement announced with General Lithium Corporation, for the supply of 140,000tpa of 6 per cent chemical grade spodumene concentrate from Pilgangoora from Q1 2018,” the aspiring lithium miner said.
Pilbara managing director Ken Brinsden said the offtake agreement with Shandong delivered multiple benefits for both parties.
“The delivery of early run-of-mine ore to interim processing facilities in China represents a fantastic innovation for the lithium industry, providing earlier access to raw material for our customer while at the same time supporting Pilbara’s fast-track development strategy by providing early cash flows from the project,” he said.
“This will provide the opportunity to mobilise the mining fleet earlier than had been otherwise planned, accelerate the development of the open pit, construct the tailings facility and prepare the ore stockpiles for subsequent process plant commissioning.
“With DSO shipments targeted to commence in July next year, this will provide us with the opportunity to generate early revenue – well ahead of our original timetable – which should deliver important strategic benefits as we complete the construction, commissioning and ramp-up of the concentrator.
“Importantly, the delivery of early run-of-mine ores will not impact the delivery of the overall 2mtpa ore processing and spodumene concentrate plant, as presented in our recent DFS study release.
“Pilbara remains on track for commissioning of the full mine site facilities from late 2017, establishing the Company as a leading low-cost supplier of spodumene concentrate to global markets.”
