PERTH (miningweekly.com) – Lithium developer Lake Resources has signed a non-binding memorandum of understanding with Japan’s Hanwa Co. for the supply of up to 25,000 tpy of lithium carbonate over a ten-year period .
The memorandum of understanding would allow for a minimum offtake of 15,000 t/y from Lake Resource’s Lake Kachi lithium project in Argentina, with both parties also able to extend the offtake agreement for another ten years.
Under the terms of the MoU, Hanwa would also consider providing financial support mechanisms such as significant equity investment, possible prepayment on levy, and trade finance facilities to secure a long-term agreement and to build a lasting partnership with Lake.
“The MoU reflects Hanwa’s intention to move quickly toward finalizing the terms of a strong, long-term and binding final agreement on the Levy, as well as enabling financial support for Lake.” , said Lake MD. Steve Promnitz.
“Lake and Hanwa view this MoU as the path to finalizing a binding long-term agreement with the ability to ramp up production and participate in Lake’s other projects to ensure high-quality lithium products with leading environmental, social and governance (ESG) benefits. are available to Hanwa’s electric vehicle (EV) and battery customers.
chair of the lake Stu Raven said finalizing a binding long-term agreement with Hanwa would strengthen Lake’s financial position as it moves toward a final investment decision later in the year.
“This MoU and the finalization of a binding off-take agreement with Hanwa will allow Lake to remain an independent supplier in global lithium supply chains and ensure security of supply to the market and customers. potential,” Crow said.
He said project finance is increasingly tied to ESG credentials and investors, debt providers, buyers and their customers are demanding that new lithium projects meet strict ESG standards.
“Close scrutiny from customers and consumers regarding the environmental credentials of lithium production and concerns about security of supply has given us the confidence to enter into this partnership with Hanwa,” Crow said.
He said the memorandum of understanding with Hanwa, and with the export credit agencies of the UK and Canada having already indicated their willingness to project debt financing of around 70% of the capital requirements of the Kachi project, was supporting Lake’s TARGET 100 program, which aims to bring 100,000 tpy of high-purity lithium chemicals to market by 2030.
The MoU and finalization of a binding long-term agreement with Hanwa will provide access to project-scale batteries to complete a solar farm power source at the Kachi Project with commercial financing at favorable rates for installation.
A previously completed updated pre-feasibility study estimated that the Kachi project could produce 25,500 t/y of lithium carbonate over a 25-year life, with estimated capital costs of $540 million.
The company said earlier this year that the definitive feasibility study would consider a production case of 50,000 t/y, given the increased demand from potential buyers. The definitive feasibility study is expected to be completed in mid-2022.