The narrative behind Australia’s next lithium producer, Core Lithium (ASX: CXO), just got a little bit sweeter after signing a supply agreement with Tesla.
Key highlights for the agreement include:
Term sheet subject to parties completing negotiations and execution of a definitive product purchase agreement by 27 August 2022
Supply expected to commence before 31 July 2023
Tesla will buy up to 110,000 tonnes of spodumene concentrate over four years
Core Lithium is fully funded to deliver its flagship Finniss Project. Construction has already commenced and first lithium concentrate production is scheduled for the fourth quarter of 2022.
According to Core Lithium’s Stage 1 Definitive Feasibility Study (DFS), the project is expected to have an annual production of circa 175,000 tonnes of spodumene.
By that measure, the Tesla agreement covers roughly 16% of annual output.
Core Lithium has been posturing for a Stage 2 expansion for the Finniss Project, which has a mine life of just 8 years.
Recent initiatives to drive resource and mine life growth include:
Acquisition of six highly prospective mining leases located adjacent to Finniss
Expanded exploration and resource drilling campaign to recommence and ramp-up in the second quarter of 2022
In addition, investors should expect additional drill assay results from the company’s 2021 drilling campaigns to be reported in the coming weeks.
The results were delayed due to issues surrounding laboratory productivity.
In addition to the Tesla announcement, Core said its strategy for Finniss currently includes a potential Stage 3 expansion.
“Stage 3 is based on a longer-term plan for the development of downstream lithium chemical processing in the Northern Territory,” said the announcement.
This suggests plans to convert spodumene into lithium hydroxide.
Tesla has agreed, subject to the definitive supply agreement, to provide additional support to assist Core with its Stage 3 expansion plans, including incorporating the downstream product into Tesla's supply chain.
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