AVZ Minerals Limited, (ASX:AVZ) has secured a second strategic, long-term offtake agreement with Shenzhen Chengxin Lithium Group Co., Ltd,.
The AVZ Minerals and Chengxin have signed a binding offtake agreement for the supply of spodumene concentrate (SC6) from the Manono Lithium and Tin Project, Democratic Republic of Congo.
Chengxin is a leading global battery materials producer that is continuing to expand its lithium hydroxide production capacity. Further details regarding Chengxin are outlined below.
AVZ’s Managing Director, Mr. Nigel Ferguson, said: “We are very pleased to conclude our discussions with Chengxin and to sign our second lithium offtake agreement.”
“This agreement takes offtake commitments to more than 50% of the Manono Project’s initial saleable SC6 production, which is a massive endorsement for our project.”
“We are well advanced with our other offtake discussions, not only for our lithium products but also for our tin and tantalum materials. These will be pursued diligently over the coming weeks and I look forward to updating the market once these agreements are finalised.”
Chengxin is set to become one of the largest lithium hydroxide producers in China, with initial production capacity of up to 25,000t lithium carbonate and 15,000t lithium hydroxide and with future staged expansions expected to increase production to approximately 70,000t per annum. Chengxin will require approximately 560,000t per annum of SC6 to satisfy its internal demand after commissioning its planned expansions.
Key terms of the Chengxin Offtake Agreement:
• Term: initial 3-year term, with extension options by mutual agreement
• Annual Supply of up to 180,000 tonnes of spodumene concentrate per annum
• Pricing USD/CIF, China determined by a formula which references various published market prices of lithium carbonate and lithium hydroxide products and underpinned by an agreed floor price
• Shipment payments via documentary letter of credit
• Termination rights included for breach of the material terms of the Offtake Agreement including non-payment or failure to supply or take annual quantity commitments