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Highlights
- Liontown Resources has formalised offtake arrangement with EV giant Tesla with definitive full-form offtake deal.
- The sourcing under this offtake agreement will be from Liontown’s Kathleen Valley Lithium Project.
- The five-year term agreement term is expected to start in 2024.
Australian battery minerals explorer, Liontown Resources Limited (ASX:LTR), shared via an ASX announcement today, that it has completed negotiations with electric vehicle manufacturer Tesla Inc. for executing a definitive full-form offtake agreement. Under the agreement, Liontown will be supplying spodumene concentrate from its 100% owned flagship project -Kathleen Valley Lithium Project in Western Australia.
Meanwhile on the ASX, LTR shares have shed off 9.29% in last five days. The share price has lost 13% in last six months. However, in past one year, LTR share price has appreciated by 108.20% on the ASX.
Key Highlights of the Agreement
- Liontown and Tesla have inked a definitive full-form offtake agreement for spodumene concentrate supply.
- The full-form agreement elucidates details on the material terms agreed between the two companies in the binding terms sheet announced on 16 February 2022.
- Tesla is anticipated to purchase 100,000 dry metric tonnes (DMT) in the first year of agreement. The quantity is also expected to be increased to 150,000 DMT per year in subsequent periods.
- The supply agreement is signed for a five-year term, expected to begin in 2024.
- Pricing under the contract is to be determined using a formula-based mechanism which will consider the market prices for battery-grade Lithium Hydroxide Monohydrate.
- As per the agreement, the material is to be sourced by Liontown from its Kathleen Valley Lithium Project in WA.
- The latest agreement document also specifies the operational and logistical requirements for the delivery of products.
- Liontown will be supplying approximately one-third of Tesla’s project start-up production capacity.
- However, the present offtake agreement is subject to Liontown commencing commercial production at its Kathleen Valley before 1 December 2025.
Management Commentary
According to Liontown’s MD and CEO, Tony Ottaviano, the agreement brings in another premier company in the global lithium-ion battery and EV space.
Source- Company’s ASX announcement, dt-6 June 22
Telsa becoming a foundational customer for Liontown, also marks a significant step for realising its ambition to become a globally significant battery materials provider.
The road ahead for Liontown
The present offtake agreement executed with Tesla is Liontown’s second definitive agreement secured for the Kathleen Valley project. The first one being signed with LG Energy Solutions in May 2022. Together, both agreements take upto 60% of Liontown’s planned production. Meanwhile, Liontown is witnessing a strong interest from a range of parties for a third offtake.
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