Western Australian lithium project developer Liontown Resources Limited (ASX: LTR) has executed a binding Offtake Agreement and Funding Facility with leading global automaker Ford Motor Company.
The Offtake Agreement with Ford is for the supply of up to 150,000 DMT per annum of spodumene concentrate – a source of lithium essential in key EV battery chemistries. The spodumene concentrate will come from Liontown’s flagship 100%-owned Kathleen Valley Lithium Project in Western Australia for five years.
The agreement represents Liontown’s third and final foundational offtake required to underpin the development of Kathleen Valley – marking the culmination of the disciplined execution of its offtake strategy.
Together with the previously announced binding full-form offtake agreements with Tesla and LG Energy Solution, Liontown’s total offtake commitments now stand at up to 450,000 DMT per annum of spodumene concentrate, representing approximately 90% of Kathleen Valley’s start-up SC6.0 production capacity of ~500ktpa.
The remaining production from Kathleen Valley is intended to be retained for spot volume sales and/or discrete offtake agreements.
Supply to Ford is expected to commence in 2024, with volumes of 75,000 DMT of spodumene concentrate in year one of operations, increasing to 125,000 DMT in year two and 150,000 DMT for years three to five of the initial five-year term.
The commercial terms of the Offtake Agreement reflect the continued strength in demand for spodumene concentrate and were not subsidised by the Funding Facility.
Under a separate Funding Facility, a Ford subsidiary will provide a A$300 million debt facility to Liontown, with the proceeds to be used towards partially funding the development costs of Kathleen Valley. The Funding Facility, together with the A$463 million raised by Liontown in December 2021, means that Liontown has now secured commitments for the required funds to support the full development of the Project through to first production.
The finalisation of debt funding, along with completion of foundational offtake arrangements, paves the way for a Final Investment Decision for the Project.
“The signing of our third and final foundational offtake agreement is a momentous milestone for Liontown and the Kathleen Valley project, with approximately 90% of Kathleen Valley’s start-up capacity now under secured long-term binding offtake agreements,” said Liontown’s Managing Director and CEO Tony Ottaviano.
“Our disciplined approach to our offtake strategy has enabled us to build a customer base of Tier-1, globally significant customers in the EV battery supply chain, validating Kathleen Valley’s status as a globally relevant lithium asset.
“In addition to the offtake, the A$300 million funding facility from Ford, together with the capital raised last year, means that we have secured commitments for the funds required to support the full commercial development of Kathleen Valley through to first production.”
Ford’s vice president of EV Industrialization, Lisa Drake, said the motoring company continues working to source more deeply into the battery supply chain to meet its goals of delivering more than two million EVs annually for our customers by 2026.
“This is one of several agreements we’re working on to help us secure raw materials to support our plan to deliver EVs for customers around the world and meet our environmental, social and governance commitments.”
About Kathleen Valley
Kathleen Valley is a new, globally significant, lithium development project located 680km north-east of Perth in Western Australia’s premier mining district.
Underpinned by a world-class lithium deposit with a Mineral Resource Estimate of 156Mt at 1.4% Li2O and 130ppm Ta2O5, Kathleen Valley is forecast to initially produce ~500ktpa of SC6.0 spodumene concentrate expanding to ~700ktpa.
The Project also has an integrated and value-adding ESG focus with greater than 60% renewable power supply planned at start-up and a strong working relationship with the Traditional Owners of the land (the Tjiwarl).
For further information please visit: https://www.ltresources.com.au/
