Elevra Lithium (ASX:ELV) has executed a binding agreement to supply spodumene concentrate from its North American Lithium (NAL) operation in Québec, Canada, to Mangrove Lithium’s proposed conversion facility in the country’s Eastern provinces.
The agreement follows a non-binding memorandum of understanding signed in February and establishes commercial terms for supplying Mangrove’s proposed 20,000-tonne-per-annum lithium carbonate equivalent (LCE) facility.
Elevra CEO Lucas Dow says the agreement provides the company with a long-term local customer on attractive terms.
“It provides Elevra with a long-term local customer for NAL production on attractive terms, backed by a price floor set above our expected cost of production and with no price ceiling to limit potential upside,” Dow says.
“Supplying a customer located close to NAL also allows us to avoid the seaborne freight costs associated with shipping to international customers, which further supports our margins.”
The agreement has an initial seven-year term, followed by a further seven-year renewal unless either party elects to terminate.
Contracted volumes total 122,000 dry metric tonnes (dmt) of spodumene concentrate in the first year and 144,000dmt annually from the second year on a take-or-pay basis.
Mangrove may increase the annual volume by up to 20%, subject to available capacity at NAL and Elevra’s agreement. It may also purchase up to 72,000dmt during any 12-month period before reaching commercial operation.
Performance under the agreement remains subject to Mangrove securing project financing, making a positive final investment decision (FID), and achieving sustained commercial operations at a minimum of 50% of nameplate capacity.
Under the agreement, Mangrove must reach FID by 31 December 2028 and begin commercial operations no more than three years later.
Pricing will be linked to the spodumene concentrate market and adjusted for product grade. The agreement includes a floor price that Elevra expects to be above NAL’s production costs, while the absence of a price ceiling preserves its exposure to future price increases.
Mangrove CEO Saad Dara says the agreement provides greater certainty over feedstock for the proposed conversion facility.
“This is a significant step forward for Mangrove and for the development of a Canadian lithium supply chain,” Dara says.
“It provides greater certainty around a key feedstock source for our planned Eastern Canada lithium conversion facility and brings together an integrated mine-to-chemicals supply chain within Canada.”
Both companies have received backing from the Canada Growth Fund, a C$15 billion ($15.25 billion) investment vehicle established to attract private capital into Canadian projects deemed strategically vital.
Mangrove secured up to US$85 million ($119.01 million) in structured financing led by the fund in January, while Elevra received an investment through convertible notes to support its staged NAL brownfield expansion.
Elevra is a Brisbane-based lithium producer that owns NAL and the Carolina Lithium Project in the US, holds a 60% interest in the Moblan Lithium Project in Québec, as well as participates in a joint venture in Western Australia.
Write to France Pinzon at Mining.com.au
Images: Elevra Lithium
