Pilbara Minerals (ASX:PLS) reports that POSCO Pilbara Lithium Solution Co Ltd has executed a US$460 million loan agreement to fund the balance of the capital development and commissioning costs for its new 43,000tpa Lithium Hydroxide Monohydrate Chemical Facility being constructed in South Korea.
Pilbara Minerals retains an 18% interest in the POSCO Pilbara JV, with an option for Pilbara to increase to 30%.
The KRW600 billion loan agreement has been executed with The Korea Development Bank and The Export-Import Bank of Korea, both well-established government-owned banks in South Korea. The debt facility represents the remaining 60% of the forecast funding required for the development of the Chemical Facility, with JV parties having previously funded their equity share.
The debt facility is non-recourse to Pilbara Minerals, with the security provided by the POSCO Pilbara JV Company and limited to the land, building, plant, and equipment of the Chemical Facility.
The debt facility, which has a 7-year term and repayments commencing two years from drawdown, comprises both a fixed and variable interest rate with tranche A (50% of the loan amount) fixed and tranche B (50% of the loan amount) variable.
The facility does not restrict the payment of dividends or other distributions from the POSCO Pilbara JV Company to its shareholders, subject to compliance with financial covenants and no events of default existing at the time. Other terms relevant to the debt are customary for a facility of this nature.
Construction of the new chemical facility commenced last year and has already made
significant progress. Construction and commissioning currently remains on schedule, with the first 21,500tpa train scheduled to commence commissioning from late 2023 and the second 21,500tpa train from the March 2024 quarter.
Pilbara Minerals will be the sole supplier of spodumene concentrate (up to 315,000tpa) to the new chemical facility.
Pilbara Minerals’ Managing Director and CEO Dale Henderson says: “We are delighted that the Joint Venture has secured this debt funding from leading Korean banks on commercially favourable terms, positioning the POSCO Pilbara JV Company to complete construction and commissioning of its new 43,000tpa lithium hydroxide chemical conversion facility in South Korea.
Construction of this world-class facility is already well underway, with the first train of 21,500 tonnes per annum scheduled to start commissioning from late this year, followed by commissioning of the second 21,000tpa train in the March 2024 quarter.
“Our 18% interest in the POSCO Pilbara JV represents a key element of Pilbara Minerals’ downstream processing strategy”
Our 18% interest in the POSCO Pilbara JV (with an option for Pilbara to increase to 30%) represents a key element of Pilbara Minerals’ downstream processing strategy, enabling the company to become an integrated lithium raw materials company.
Building on our strong relationship with POSCO, we are delighted to be jointly establishing a strong foothold in South Korea’s emerging battery materials industry at the doorstep of established major battery manufacturers.”
Pilbara Minerals owns 100% of the world’s largest, independent hard-rock lithium operation. Located in Western Australia’s resource-rich Pilbara region, the Pilgangoora Operation produces a spodumene and tantalite concentrate. The significant scale and quality of the operation has attracted a consortium of high quality, global partners including Ganfeng Lithium, General Lithium, POSCO, CATL, and Yibin Tianyi.
