Lithium developer Lake Resources gets offtake interest from Japan
miningweekly.com
29th March 2022
By: Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia
PERTH (miningweekly.com) – Lithium developer Lake Resources has inked a non-binding memorandum of understanding (MoU) with Japan’s Hanwa Co. for the supply of up to 25 000 t/y of lithium carbonate over a ten-year period.
The MoU would allow for a minimum 15 000 t/y offtake from Lake Resource’s Lake Kachi lithium project, in Argentina, with the two parties also able to extend the offtake agreement by a further ten years.
Under the terms of the MoU, Hanwa would also consider providing financial support mechanisms such as a meaningful equity investment, a potential prepayment on offtake, and trade finance facilities in order to secure a long-term agreement and build up a sustainable partnership with Lake.
“The MoU reflects that Hanwa intends to move quickly to progress finalisation of the terms on a strong, long-term, binding final agreement on offtake, as well as allow for financial support for Lake,” said Lake MD Steve Promnitz.
“Both Lake and Hanwa see this MoU as the path to finalisation of a binding long-term agreement with the ability to scale up production and participate in Lake’s other projects to ensure high quality lithium products with leading environmental, social and governance (ESG) benefits are available to Hanwa’s electric vehicle (EV) and battery customers.”
Lake chairperson Stu Crow said the finalisation of a binding long-term agreement with Hanwa would bolster Lake’s financial position as it moved towards a final investment decision later in the year.
“This MoU and finalisation of a binding offtake agreement with Hanwa will allow Lake to stay an independent supplier into global lithium supply chains and ensure security of supply to the market and potential customers,” Crow said.
He said project financing was becoming increasingly tied to ESG credentials and that investors, debt providers, and offtakers and their customers were demanding that new lithium projects adhere to strict ESG standards.
“Increasing customer and consumer scrutiny around the environmental credentials of lithium production and concerns about security of supply have given us the confidence to enter into this partnership with Hanwa,” Crow said.
He said the MoU with Hanwa, and with UK and Canada export credit agencies already having indicated a willingness to project debt finance of around 70% of the Kachi project’s capital requirements, supported Lake’s TARGET 100 Programme, which has the goal of producing 100 000 t/y of high purity lithium chemical to market by 2030.
The MoU and finalisation of a binding long-term agreement with Hanwa will provide for access to project-scale batteries to complement a solar farm energy source at the Kachi project with trade finance at favourable rates for installation.
A previously completed updated prefeasibility study estimated that the Kachi project could produce 25 500 t/y of lithium carbonate over a mine life of 25 years, with capital costs estimated at $540-million.
The company said earlier this year that the definitive feasibility study would consider a production case of 50 000 t/y, given the increased demand from potential offtakers. The definitive feasibility study is due for completion in mid-2022. |
