Mineral Resources Ltd (ASX: MIN), a provider of mining infrastructure services announced its recent binding Asset Sale and Share Subscription Agreement (Sale Agreement) with Albemarle Corporation. Under this agreement, the company is ready to sell 50% interest in the Wodgina Lithium Project and simultaneously enter into 50:50 joint venture to produce a spodumene concentrate and lithium hydroxide at this project.
After signing the exclusive agreement and commercially agreed on key terms with Albemarle on 21 November 2018, the sales agreement executed. It created a keen interest amongst global participants from battery minerals and chemical value chain.
As per the sales agreement, Albemarle which purchase 50% interest in tenements under the Wodgina lithium project. It also includes the project’s assets as well as related infrastructures. Once this project gets completed, both companies will form 50:50 unincorporated joint venture based on certain sales key terms under which Albemarle needs to pay US$1.15 billion in cash on completion of sale interest. Albemarle will also be holding 50% interest in mineral rights in Wodgina tenements. However, it will exclude the iron ore which will be taken care of by Mineral Resources. Under Tantalum which forms a part of Global Advanced Metals Greenbushes Pty Ltd, there are certain fixed infrastructures and utility asset, i.e., the spodumene concentrate plant and the mobile mining equipment which is being owned by MIN. Albemarle is also supposed to hold 50% interest in it.
The terms and condition for the completion of the sales agreement include regulatory approvals from Foreign Investments Review Board (FIRB) and Chinese anti-trust. It also included consent from WA Ministers and third parties in the underlying tenements.
On completing the sales agreement, parties will enter into the joint venture regarding exploration, development, mining, processing, and production of lithium and other minerals in the area mentioned in the joint venture. MRL will take the ownership of constructing and also funding the fixed infrastructure, utilities and the processing plants for the production of 750Ktpa of 6% spodumene concentrate. Other than this, if both agree to build any future lithium plant, that will be funded as jointly.
On the other hand, MIN is responsible for giving the life of the Wodgina JV along with services related to crushing, operations and maintenance of camp and airport and logistics about transportation of the product from the port to ship loading.
Through JV at the Wodgina project needs to produce 750Ktpa of 6% spodumene concentrate. They also need to build two battery-grade lithium-hydroxide plants in two stages to produce 50ktpa of lithium hydroxide (LCE basis) that will be funded jointly based on the prevailing market conditions.
Albemarle holds a license for making its core lithium-hydroxide plant designs at the Wodgina JV project. It is also responsible for marketing and sales of the spodumene concentrate produced at the site before the construction of the hydroxide plant.
The formation of the management committee will include members from each of the two JV parties in equal numbers. The committee will be responsible for providing any misunderstanding of the manager (a special purpose company whose formation will be after the JV completion and will be owing equal shares by both the parties) as well as approving the critical decisions and budget sanction.
By the end of trading on 14 December 2018, the market price of the share was A$14.300 with the stock holding a market capitalization of A$2.72 billion.