Reinvigorating the Lithium Landscape: Altura’s lithium supply contract with Major Shareholder

  • Jun 19, 2020 AEST
  • Team Kalkine
Reinvigorating the Lithium Landscape: Altura’s lithium supply contract with Major Shareholder

Summary

  • World-class Altura Lithium Project owner, Altura Mining secures a contract for 2020 and a multi-year Binding Offtake Agreement (BOA) with a subsidiary of Ningbo Shanshan, a world-class producer of anode and cathode material to the LIB market.
  • Altura Mining’s customer lists enhanced with the addition of Shanshan, which is also the second-largest shareholder in the Company with a 15.10% stake.
  • The strategic assessment of Altura’s Earn-in Agreement with Sayona Mining Limited, a lithium project developer, was also completed for the Company’s Western Australian lithium portfolio, located in the world-class Pilbara lithium mining district.

Altura Mining Limited (ASX:AJM), a key player in the global lithium market, has announced to have secured both a contract for 2020 and a multi-year Binding Offtake Agreement (BOA) with Hunan Yongshan Lithium Co., Ltd, a subsidiary of Ningbo Shanshan Co., Ltd, (Shanshan). Shanshan is a leader in producing and marketing anode and cathode material to the lithium battery market.

The need for raw material essential to manufacture lithium-ion batteries (LIB) for electric vehicles (EVs) and static storage utilities is continuing to increase, and Altura is leveraging the same. The Company owns and operates the world-class Altura Lithium Project at Pilgangoora in Western Australia’s Pilbara region with its current processing infrastructure having a production capacity of 220,000tpa of high-quality spodumene concentrate. Altura has been producing commercially since March 2019 and delivering increased production and sales while also reducing its unit costs ever since.

Good Read: An Overview of Lithium Stocks and Lithium Market

Chinese-based Shanshan, founded in 1989, is one of the world’s largest integrated suppliers of LIB materials such as cathodes, anodes, and electrolytes. It has a market cap of ~AU$2.7 billion on the Shanghai Stock Exchange and employs more than 4,000 people. Throughout 2019, Shanshan undertook extensive market research and design activities around its purpose built, state of the art ~US$300 million Lithium Chemical plant located in Changsha, China.

Shanshan completed Phase 1 design of the plant in early 2020, specifically  around Altura’s lithium concentrate as feedstock. Construction commenced in April 2020 for Phase 1, that will have a capacity of 25k tonnes Lithium Carbonate Equivalent (LCE) including 15,000 tonnes LCE for battery-grade Lithium Hydroxide and 10k tonnes LCE for battery-grade Lithium Carbonate. Phase 1 is due for completion in late 2020/early 2021 with ramp-up to full production expected by April 2021.

Phase 2 of the Lithium Chemical plant will commence construction in 2021 and will add a further 20,000 tonnes LCE of capacity.

Multi-Year Lithium Offtake Agreement – Highlights

The latest supply agreements bolster Altura Mining’s close relationship with Shanshan, which is the second-largest shareholder of Altura Mining, with a 15.10% stake. Altura Mining is now a vital supplier to Shanshan’s new lithium chemical plant. 

 

James Brown, Managing Director at Altura Mining, commented on the recent development, stating that the offtake agreement with Shanshan diversified Altura Mining’s customer base further, lowered the risk sales channels, and is a testimony to the quality of the product as well as the market-leading nature of the Company’s operations.

The offtake agreement follows months of discussions between the two parties to make sure that they get precisely what is required to support the lithium chemical plant. Shanshan has demonstrated excellence in design with a focus on sustainability through the adoption of ultra-low emission technology, water recycling and heat/energy recovery systems included in their chemical plant.

Besides, the customer list of Altura Mining boasts some of the biggest and best names in the battery materials sector and addition of Shanshan to this list further demonstrates the market’s increasing desire for stable, long-term, high-quality lithium concentrate supplies, according to James Brown.

Strategic review of Earn-in Agreement with Sayona Mining

On 4 June 2020, Altura Mining informed that it had completed a strategic review of its Earn-in Agreement with lithium project developer Sayona Mining Limited (ASX:SYA) over its Western Australian lithium portfolio, located in the world-class Pilbara lithium mining district. The agreement was signed in 2019 with a primary focus on jointly exploring the Company’s tenements.

Following the strategic review, the tenements retained by cover 971 km2 while some of the tenements have been relinquished. Mapping and sampling had already begun at Mallina (E47/2983), Tabba Tabba (E45/2364), Deep Well (E47/3829), and Red Rock (E45/4716) tenements, which are located close to Altura’s established mining and processing infrastructure, which will significantly enhance the development potential of any discoveries.

Altura had implemented appropriate processes and procedures across all working areas, including restricted access to the mine site and process plant concerning COVID-19. The Company has a clear pathway forward to reduce its operating costs further and continues to perform at globally competitive levels.

Stock Information

The AJM stock settled the day’s trade on 19 June 2020 at AU$0.066,  zooming up 17.86%, with a market capitalisation of AU$167.23 million. AJM has generated positive returns of 36.59% in the last one month, 60.00% in the previous three months, and 7.69% Year-to-date.

 


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