Lake Resources NL Enters into Lithium Offtake Agreement with New Global Battery Maker

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Lake Resources NL (ASX:LKE, OTCQB:LLKKF) has partnered with prominent battery manufacturer SK On in a deal to extract up to 25,000 tonnes of battery-grade lithium per year from the Kachi Lithium project in Argentina.

The clean lithium developer has signed a conditional framework agreement (CFA), which also stipulates that SK On will make a 10% strategic investment in the lithium stock.

Lake says the agreement underscores the importance of a clean lithium supply chain, which is necessary to meet global environmental demands for electric vehicles, particularly in North America.

It also represents a continued reduction in project risk for financiers and investors.

The fine print

The CFA covers an initial term of five years, but there is an option to extend for another five years should the need arise.

SK On will resume its 10% investment based on the 20-day volume-weighted average price of LKE shares.

The company will also take half of the lithium product from the Kachi project – up to 25,000 dry metric tons each year.

Although the figures have not been announced, the take-up deal is set on an agreed-to-market price formula, which is based on the average quoted price during the quote period.

Of course, the CFA relies on several prerequisites, including a definitive feasibility study, demonstration plant results, financial due diligence, and product specifications.

But once these conditions are met, the CFA will become unconditional.

Strengthening mutual partnership

Lake’s new CEO and managing director, David Dickson, said the CFA has cemented the company’s ability to develop environmentally friendly production.

He said it also gives SK On the opportunity to participate in Lake’s other projects as they develop, ensuring a supply of high-quality lithium products for the growing battery maker.

“SK On is very pleased to execute this CFA with Lake, a clean lithium developer, which can enable SK On to secure a stable lithium supplier for its U.S. supply chain,” said SK Vice President. We, Jinsuk Ryu.

“Lake fits particularly well with SK On’s environmental, social and governance (ESG) policy, as it uses environmentally friendly direct lithium mining technology to produce lithium.

“With this CFA, both parties will strengthen their mutual partnership to advance opportunities to secure sustainable sources of raw materials in the future,” she said.

Speaking on the deal, Lake executive chairman Stu Crow said the deal strengthens the company’s long-term shareholder base and adds to the equity component required for the withdrawal of credit facilities. for project development.

“CFA offers a long-term strategic agreement with SK On, one of the world’s leading producers of lithium-ion batteries with a major growing presence in the North American market,” he explained.

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