Lithium Co. Signs CA$2B Supply Deal With EU Auto Maker

Source: Streetwise Reports   10/21/2022

Rock Tech Lithium Inc. shares traded 30% higher yesterday after the company reported it executed a five-year supply contract with Mercedes-Benz AG of Germany. Under the terms of the agreement, Rock Tech will provide Mercedes with 10,000 tonnes of battery-grade lithium hydroxide yearly, which is expected to generate CA$2 billion in revenue for the company.

Vancouver B.C.-based lithium explorer and developer Rock Tech Lithium Inc. (RCK:TSX.V; RCKTF:OTCQX; RJIB:FSE; A1XF0V:WKN), which owns a 100% interest in the Georgia Lake lithium project in Ontario’s Thunder Bay Mining District, yesterday announced that “it has entered into a definitive supply agreement with Mercedes-Benz Group AG (MBGYY:OTCMKTS;MBGAF:OTC-Pink) providing for the supply of an average of 10,000 tonnes of battery-grade lithium hydroxide per year.”

The agreement between the two companies will run for a period of five years and is expected to provide Rock Tech with total revenues of around CA$2 billion over the life of the agreement.

Rock Tech’s CEO Markus Bruegmann remarked, “Signing the Supply Agreement marks a significant milestone of our offtake strategy, and I am honored that Mercedes-Benz demonstrates trust in Rock Tech as a new but reliable player in a diversified European battery supply chain.”

The contracted deliveries will account for about 40% of the forecasted annual production from Rock Tech’s planned converter capacity in Guben, Germany.

Rock Tech’s CEO Markus Bruegmann remarked, “Signing the Supply Agreement marks a significant milestone of our offtake strategy, and I am honored that Mercedes-Benz demonstrates trust in Rock Tech as a new but reliable player in a diversified European battery supply chain.”

“We intend to focus our efforts on providing lithium hydroxide that will help to bring Mercedes-Benz’s electric mobility ambitions into action. This arrangement is a major step forward in our plans to directly contribute to clean mobility,” Bruegmann added.

Mercedes-Benz Group’s Chief Technology Officer Markus Schäfer commented, “This significant amount of lithium sourced directly from Rock Tech will help Mercedes-Benz to advance localization of European production of state-of-the-art battery cells. The on average 10,000 tonnes of lithium hydroxide per annum will play a key role in securing the lithium supply for our battery production in Europe to help achieve our ambitious electrification goals.”

It is anticipated that the high-quality lithium hydroxide produced by Rock Tech will allow Mercedes-Benz to scale up production and equip approximately 150,000 electric vehicles (EVs) with premium high-performance batteries.

Both firms are striving to meet their goals of achieving carbon neutrality and, as part of the agreement, are committed to creating a roadmap to achieving CO2-neutral production of lithium hydroxide by year-end 2030. The companies noted that to ensure this objective is met, the agreement specifically requires that “all lithium hydroxide supplied by Rock Tech shall be sourced from mining sites audited by the Initiative for Responsible Mining Assurances (IRMA).”

Rock Tech is headquartered in Vancouver, B.C., and is focused on the exploration and development of lithium properties. The company holds a 100% interest in the Georgia Lake lithium project located within Ontario’s Thunder Bay Mining District. In addition to its upstream activities, the firm is investing in downstream operations, with the first planned lithium hydroxide converter built in Germany to supply the EU auto market with the materials needed to manufacture EV batteries. Approximately 40% of the product produced at this plant will be sold to Mercedes-Benz to satisfy the recently signed 5-year supply contract.

Mercedes-Benz Group AG is dedicated to moving toward CO2 neutrality and is strategically acting to transform its vehicle production to an all-electric platform. The company is highly focused on developing and integrating advanced battery cell technology with higher energy density and safety to increase the quality, range, and performance of its cars and vans.

Rock Tech Lithium has a market cap of around US$178.3 million, with approximately 84.7 million shares outstanding. RCKTF shares opened nearly 28% higher yesterday at US$2.63 (+US$0.572, +27.79%) over the previous day’s US$2.058 closing price. The stock traded yesterday between US$2.44 and US$2.70 per share and closed for trading at US$2.68 (+US$0.622, +30.22%).

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures:
1) Stephen Hytha wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: MBGYY:OTCMKTS;MBGAF:OTC-Pink, RCK:TSX.V; RCKTF:OTCPK; RJIA:FSE, )