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The agreement – the first direct investment by an automobile manufacturer into an upstream lithium supplier – covers up to 150,000 tonnes per annum of chemical grade spodumene concentrate from an expanded second stage development, a A$28 million equity subscription and up to US$50 million of debt financing.
Stage 2 was envisaged as boosting production to 564,000tpa, but Pilbara is studying an expansion to 5Mtpa for 800,000tpa in response to demand.
Pilbara now has a line of sight to sales of between 150,000-300,000tpa from Stage 2 and a financing pathway from its two off-takers that could fully fund the expansion.
The subscription agreement for 56 million shares, to help complete Stage 1 construction and the Stage 2 definitive feasibility study, replaces an earlier planned investment for $17.75 million with General Lithium that stalled due to regulatory complaints.
The shares will be placed at 50c, a 4% premium to the company’s 30-day average but below the last trading price of 62c this morning, after a 13.35% rise today.
The Great Wall subscription will be finalised once the off-take agreement terms are finalised by October 30.
Great Wall will take an initial 75,000tpa of Stage 2 production, and may move to 150,000tpa once the binding terms of the US$50 million debt or offtake prepayment funding facility are agreed.
The terms are for an initial five years with options to 15 years on pricing terms similar to the Ganfeng Lithium and General Lithium off-take agreements.
General Lithium remains on board as an offtaker for 140,000tpa of Stage 1 from 2018.
The Great Wall offtake deals will become binding once the equity is placed, the DFS is complete, and a positive final investment decision is made.
Pilbara also has the right to earn into a downstream spodumene conversion plant with Great Wall for some of the Stage 2 production.
The funding follows $195 million in funding raised earlier this year at 35c to support the $234 million 2Mtpa Stage 1 development.
