Advanced lithium explorer Core Exploration (ASX: CXO) has reported more positive news at its flagship Finniss lithium project with Shanghai-listed Meidu Energy’s subsidiary Shandon RuiFu Lithium Co Ltd agreeing to purchase up to 150,000t of lithium concentrate per annum from the project.
Shandong RuiFu is one of China’s major lithium producers and the non-binding term sheet with Core allows Shandong RuiFu to secure up to 150,000tpa of lithium concentrate grading between 5% and 5.5% lithium from the Northern Territory project.
As part of the agreement, Core will receive a US$35 million conditional prepayment facility from Shandong RuiFu.
The prepayments will be made to Core in stages as it achieves key development milestones at Finniss.
Shandong RuiFu will also invest A$3 million in Core, which will increase its stake in the company to 10%.
The offtake agreement with Shandong RuiFu follows the contract Core secured late last year where Ya Hua International Investment and Development (Yahua) agreed to purchase 1 million tonnes of direct shipping ore a lithium concentrate product.
This agreement included a US$20 million prepayment.
“This funding and concentrate supply term sheet with Shandong RuiFu, along with our existing prepayment agreement with Yahua, sum to US$55 million in prepayments, and has the potential to provide the funding solution for the relatively low capex required to get the Finniss lithium project into production,” Core managing director Stephen Biggins said.
Core released a prefeasibility study on Finniss in June which calculated the capital expenditure required to develop the project into production would be around A$53.5 million.
Finniss lithium project
Finniss encompasses around 500 square kilometres in tenements and hosts the primary Grants deposit, which was the focus of the recent PFS.
The PFS was based on the Grants resource of 2 million tonnes grading 1.5% lithium.
An initial 26-month operation is expected to produce 400,083t of spodumene concentrate grading 5%.
The PFS did not take into account the resource for the BP33 deposit of 1.4Mt grading 1.40% lithium.
Additionally, recent drilling at Grants has confirmed “significant” extensions to the deposit, which core believes will boost the current resource inventory.
A definitive feasibility study is due by the end of the year, with Core targeting first spodumene concentrate deliveries in 2019.
“As we progress this project towards development, we are continuing to build relationships with potential offtakers from China, Korea and Japan,” Mr Biggins said.
“We see the development of Grants as just the beginning for Core, as we anticipate Core’s bank of mineral resources will expand in the future, and our entry into production should be well-time to coincide with what we see as rapidly increasing global long-term demand for lithium batteries,” Mr Biggins added.
Core’s share price surged more than 13% on today’s news to hover at A$0.059 by early afternoon.