ioneer secures first binding lithium offtake agreement with EcoPro Innovation

ioneer Ltd (ASX:INR) (OTCMKTS:GSCCF) (FRA:4G1) has inked its first binding offtake supply agreement with EcoPro Innovation Co Ltd, a subsidiary of a South Korean battery maker and the world’s second-largest nickel-cobalt-aluminium oxide (NCA) cathode materials manufacturer.

The offtake deal has a three-year term, over which the ASX-listed lithium-boron developer will provide EcoPro Innovation with lithium carbonate from its Rhyolite Ridge project in Nevada, USA.

Across the contract’s lifespan, ioneer is poised to supply its offtake partner with between 2,000 tonnes and 7,000 tonnes of lithium carbonate per annum from what it describes as “the most advanced lithium development project in the US”.

Overall, the offtake agreement should account for as much as 34% of ioneer’s annual lithium carbonate output over the first three years of production.

All that remains is for ioneer to reach a final investment decision for the offtake deal to go ahead.

Shares have been as much as 9% higher to A$0.37 while the company’s market cap at the start of the day’s trading was approximately A$644.9 million.

“Valuable agreement with world leader”

ioneer managing director Bernard Rowe said: “The agreement with EcoPro marks a significant milestone for ioneer and will be a valuable partnership.

“It is our first lithium offtake agreement and partnering with a recognised world leader in cathode materials manufacturing is a testament to the quality of our lithium carbonate.

“Following a pilot plant tour in mid-2019 and detailed testing of our product samples, we are pleased that EcoPro found that our materials meet its exacting standards and determined that ioneer was the right partner to support EcoPro’s strategy for producing battery-grade lithium hydroxide.

“Equally important is ioneer and EcoPro’s shared focus on sustainability. EcoPro is committed to the production of technologies that reduce emissions, and ioneer is empowering EcoPro through the production of these critical minerals with a significantly lower carbon footprint.”

The offtake agreement

Breaking it down, EcoPro is required to offtake at least 2,000 tonnes of lithium carbonate per annum from Rhyolite Ridge, with an additional and optional 5,000 tonnes per annum subject to both parties reaching a mutual agreement no later than 2022’s first quarter.

Offtake pricing will be adjusted quarterly and calculated in US dollars per tonne, based on a price formula agreed to by both companies.

Once Rhyolite Ridge comes into production, ioneer is expected to produce an annual average of around 20,600 tonnes of lithium carbonate, or approximately 22,000 tonnes of lithium hydroxide, along with approximately 174,400 tonnes of boric acid per year over the 26-year mine life.

ioneer hopes to kick off production at the lithium-boron asset in 2023.

Today’s binding deal follows an initial offtake agreement and two sales and distribution agreements inked for boric acid production, representing 100% of offtake in year one and more than 85% of boric acid production in years two and three.

EcoPro Innovation president Anthony Kim said: “As a trusted and respected company that seeks to improve the quality of life for mankind, we are pleased to partner with ioneer, who share a similar vision.

“ioneer’s lithium carbonate is well suited for conversion to high purity lithium hydroxide with a minimal environmental footprint. The US location of Rhyolite Ridge, coupled with the growing importance of the electric vehicle sector, positions both companies to play an important role in the electrification of transportation in the USA.”

Story by ProactiveInvestors