European Lithium (ASX:EUR) has signed a binding term sheet with Saudi Arabia-based Obeikan Investment Group to jointly develop and operate a lithium hydroxide processing plant in Saudi Arabia.
The company says the agreement has been structured on an equal 50:50 joint venture (JV) basis, which will be geared towards developing, constructing, and commissioning the plant in order to convert lithium spodumene concentrate into lithium hydroxide from the Wolfsberg Lithium Project in stages.
European Lithium reports the proposed JV will seek to have an exclusive right to purchase spodumene mined from the current resource at Wolfsberg. Additionally, the facility will be developed to meet the minimum initial capacity and product specifications based on European Lithium’s binding long-term supply agreement with BMW.
Obeikan is also expected to receive lithium spodumene concentrate at a reduced rate subject to the successful commissioning of the plant, with a floor price of US$3,000 per tonne and a ceiling price of US$7,000 per tonne over the life of the current Wolfsberg resource.
The company notes processing plant capital investment will be fully funded through the JV and that the processing plant is expected to deliver ‘significant’ Opex and Capex savings.
To this end, European Lithium is expected to engage DRA Global to update the existing Definitive Feasibility Study (DFS) to reflect these potential savings and produce a new project net present value (NPV).
Addressing the agreement, Chairman of European Lithium Tony Sage says: “We are pleased to reach this strategic step in partnering with Obeikan that paves the way for significant Opex savings including greatly reduced energy and financing costs, and a much lower taxation rate.
“We look forward to progressing our plans to harness the latest technology in developing a facility of the highest quality and efficiency…”
We look forward to progressing our plans to harness the latest technology in developing a facility of the highest quality and efficiency, and in doing so, strengthen the economics of Wolfsberg and our future projects.”
The company also notes development conditions include both parties entering into a shareholder agreement (SHA), agreeing to contributions to the JV, and obtaining approvals.
With the binding term sheet now signed by both parties, European Lithium announces that its Critical Metals Corp arm is progressing to completion, with final Securities and Exchange Commission (SEC) approval expected to occur this month and a listing on NASDAQ expected to take place shortly after, following approval from Sizzle shareholders.
European Lithium is an ASX-listed mining exploration and development company focusing on its wholly owned Wolfsberg Lithium Project in Austria in order to be the first local lithium supplier in an integrated European battery supply chain.
The project is located 270km southwest of the city of Vienna in Carinthia and represents a hard rock lithium deposit with a JORC resource and exploration upside. It is situated in proximity to rail and road infrastructure and is well-connected to European consumers, the electric vehicle (EV) industry, and a growing number of battery manufacturers.
Write to Adam Drought at Mining.com.au
Images: European Lithium Ltd