Lake Resources (ASX: LKE) has entered into a conditional framework agreement to supply Netherlands-based company WMC Energy lithium carbonate from the Kachi brine project in Argentina’s Catamarca Province.
The deal secures up to 25,000 metric tonnes per year of battery-grade lithium for WMC, as well as a 10% stake in Lake (at $1.20 per share) to support the realisation of Kachi.
It will be for an initial 10-year term with the option to extend for an additional five years.
The agreement is subject to conditions including finalisation of a definitive feasibility study; the performance of the Lilac demonstration plant; due diligence by WMC; and the lithium carbonate equivalent offtake meeting specifications.
Key achievement
Lake executive chairman Stu Crow said the framework agreement represented a key achievement in Kachi’s development.
“WMC has a track record of being a market leader in nuclear fuels and expanded into battery materials including lithium to serve predominantly the US and European lithium-ion battery supply chain for electric vehicles,” he said.
“This agreement delivers a long-term strategic alignment with WMC and its supply chain into the European and North American markets.”
He said the agreement would also strengthens Lake’s long-term shareholder base and add to the equity component required for drawdown of debt facilities for project development.
Scaling-up lithium production
Lake’s newly-appointed chief executive officer David Dickson said the new offtake agreement cements an ability to scale-up production of lithium carbonate equivalent product in an environmentally-safe way and offers partners like WMC an opportunity to participate in adjacent projects.
“As Lake moves to develop these projects, a growing supply of high-quality lithium products becomes available to WMC and its partners and customers across the US and Europe,” he said.
“Increasing customer and consumer scrutiny around the environmental and ethical credentials of lithium projects particularly from the European markets drives our focus on sustainable extraction.”
A spokesperson for WMC said the agreement would help Lake expand its downstream footprint across the European and North American lithium-ion battery supply chain, enabling the company to benefit from anticipated growth in demand for battery materials such as lithium carbonate across these markets.
