On 22 November 2018, Mineral Resources Limited (ASX: MIN) entered into an Exclusivity Agreement with Albemarle Corporation in relation to the potential sale of a 50% interest in the Wodgina Lithium Project and formation of a 50:50 joint venture that will produce spodumene concentrate and lithium hydroxide. Following this news, the share price of the company uplifted by 26.23 percent as on 22 November 2018 (AEST 1:42 PM).
As per the Agreement, Albemarle Corporation will have to pay US$1.15B for the 50% interest in the Wodgina Lithium Project. Albemarle will make its proprietary lithium hydroxide plant designs available to the Wodgina JV and it will manage the marketing and sales of lithium hydroxide produced by the Wodgina JV. As per the Company’s announcement, the Wodgina JV is expected to produce up to 750Ktpa of 6 percent spodumene concentrate from Wodgina Project. The concentrate will be used as feedstock for the lithium hydroxide plant once constructed. The lithium hydroxide plant at Wodgina Project will be jointly funded and operated by both the parties in stages. The first stage is expected to produce at least 50Ktpa of lithium hydroxide and the second stage is expected to convert the remaining volume of spodumene concentrate to lithium hydroxide.
According to the MIN’s Managing Director, Mr. Chris Ellison, MIN and Albemarle together at Wodgina will produce and supply high quality, competitively priced lithium products into the market to meet increasing global requirements for these important energy storage products.
Under the Agreement, it has been agreed by both the parties that until 14 December 2018, MIN will negotiate exclusively with Albemarle regarding the Wodgina JV and during such period it will not engage in any discussion with any third party regarding a potential sell down and joint venture with respect to the Wodgina Lithium Project. Likewise, Albemarle will also negotiate exclusively with MIN regarding the Wodgina JV during such period.
The company has advised its shareholders that there is no certainty that MIN will enter into the Definitive Documents or complete the sale of the Interest and the formation of the Wodgina JV on the commercial terms.
Mineral Resources also held its Annual General meeting on 22 November 2018 at which the company provided the FY 2019 Outlook. As per the FY19 Outlook, the EBITDA of the company is expected to be between A$280 million and A$320 million, with the Mining Services Division expected to contribute between A$240 million to A$260 million in FY 2019. In FY 2018, Mineral Resources’ revenue increased by 16 percent to $1.7 billion and EBITDA increased by 9 percent to $506.7 million over the prior corresponding period. The operating cash flow in FY 2018 increased by 41 percent to $538.7 million.
In the last six months, the share price of the company decreased by 35.39 percent as on 21 November 2018. MIN’s shares traded at $15.715 with a market capitalization of circa $2.34 billion as on 22 November 2018 (AEST 1:42 PM).