European Lithium signs MoU to explore offtake options

Wed 22 Dec 21, 12:12pm (AEST)
European Lithium's non-binding MOA with Traxys Europe warrants big red flag

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Key Points

  • European Lithium has already been introduced to potential lenders
  • Non-binding agreement seeks to explore offtake and financing opportunities

European Lithium (ASX: EUR) has entered into a non-binding memorandum of agreement (MOA) with Traxys Europe to support the development of its Wolfsberg Lithium Project in Austria. 

Traxys is a global metals and natural resources trading company. Its logistics, marketing, distribution, supply chain management and trading activities span over 20 offices worldwide with annual turnover in excess of US$7b.

Under the MOA, European Lithium will work with Traxys to negotiate commercial terms for an offtake and/or marketing agreement for lithium hydroxide and any applicable by-products. 

The discussions will also include Traxys’ support to secure working capital and other project financing facilities for the development of Wolfsberg. 

It is understood that Traxys has already introduced European Lithium to financial institutions, opening direct communications with potential lenders. 

“Finalising an offtake agreement is another key milestone for the Company and will add to recent developments at the Wolfsberg Project,” said European Lithium Chairman, Tony Sage.

“In the current high lithium price environment, partnering with Traxys and leveraging their expertise will achieve the best result for shareholders while the Company retains flexibility,” Sage added. 

More substance is needed

European Lithium shares rallied 9.5% as the market opened. However, its worth acknowledging that the deal is non-binding in nature.

This is the second time Traxys has dealt with ASX lithium companies this week.

On Monday, Magnis Energy Technologies (ASX: MNS) signed a six-year binding offtake agreement with Traxys for the supply of natural graphite. 

The deal warranted red flags as Magnis was willing to pay an upfront marketing fee of 700,000 ordinary shares and 1.3m options to its new found partner.

Magnis shares opened 12.6% higher on Monday, before closing with a gain of just 2.3%. Investors are clearly catching onto deals that lack a spine.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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