Battery materials miner Liontown Resources will supply 150,000 dry metric tonnes per annum of lithium spodumene concentrate to Tesla following a legally binding sales and purchase term sheet agreement.
The Initial five-year term is due to start in 2024 with Tesla buying 100,000 dry metric tonnes (DMT) in the first year, increasing to 150,000 per year.
Both firms aim to complete the negotiation and execution of detailed definitive agreements, which must be completed and executed by 30 May 2022.
The material will be mined from Liontown’s A$473 million ($34 million) Kathleen Valley Lithium Project in Western Australia.
Spodumene concentrate production from the project is expected to start in 2024.
The agreement with Tesla is the second offtake arrangement secured for Kathleen Valley following the foundational offtake arrangement with LG Energy Solutions in January.
Together with the LG Energy Solutions arrangement, more than half of Liontown’s planned production is now covered by long-term agreements.
Liontown’s managing director and CEO, Tony Ottaviano, said securing a second offtake sales agreement was a milestone in the development of the Kathleen Valley Lithium Project.
He said; “We now have two of the premier companies in the global lithium-ion battery and EV space signed up as foundational customers.
“We are also continuing to progress discussions with additional potential customers for the remaining available production.”
The supply deal represents around one-third of the project’s start-up SC6.0 (6% lithia concentrate) production capacity of ~500ktpa (kilo tonnes per year).
Kathleen Valley is underpinned by a world-class lithium deposit with a mineral resource estimate of 156Mt (megaton) at 1.4% Li2O and 130ppm Ta2O5, and is forecast to initially produce ~500ktpa of SC6.0 spodumene concentrate expanding to ~700ktpa.
The Ore Reserve supports an initial ~23-year mine life, with Liontown targeting further expansions.