Core Exploration reaches deal with major Chinese lithium group

Core Exploration reaches deal with major Chinese lithium group

Mon, 30/07/2018 - 11:34
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Core Exploration

Drilling operations at Core Exploration's Finniss project in the Northern Territory. Photo: Core Exploration

Emerging lithium miner Core Exploration has won the backing of one of China’s biggest lithium processors, signing a non-binding deal which would underpin the development of the ASX-listed company’s Finniss operation in Australia’s Northern Territory.

Core announced to the ASX that it had signed a non-binding term sheet with Shandong RuiFu Lithium Co, a subsidiary of Shanghai Stock Exchange-listed Meidu Energy Co, to deliver up to 150,000 tonnes of lithium concentrate annually from the Finniss mine.

In return, Shandong RuiFu will provide Core Exploration with a $US35 million conditional pre-payment facility and invest $3 million in the company via a share placement priced at 5 cents per share.

If the agreement is formalised in coming weeks, Shandong RuiFu will hold a 10 per cent shareholding in Core Exploration.

Shandong RuiFu is one of the largest lithium hydroxide and carbonate producers in China, while its parent company has a market capitalisation of around $3 billion.

Payments under the Shandong RuiFu facility will be provided to Core in stages as key development milestones are reached.

Core Exploration managing director Stephen Biggins said combining the Shandong RuiFu deal with an existing pre-payment agreement with Ya Hua International Investment and Development Co would potentially provide a funding solution to bring the Finniss project into production.

Ya Hua, a subsidiary of the $2.4 billion Sichuan Yahua Industrial Group, entered an agreement with core last year to provide a $US20 million pre-payment facility in return for the supply of 1 million dry metric tonnes of lithium direct shipping ore from the Finniss mine.

Ya Hua, another of China’s big lithium hydroxide and carbonate producers, also holds a 9.7 per cent stake in Core Exploration.

 “The execution of the non-binding term sheet not only validates the high quality of Core Exploration’s Finniss lithium project, but also the strong success Core is having in developing relationships with some of China’s largest lithium producers,” Mr Biggins said in a statement to the ASX.

“As we progress this project towards development we are continuing to build relationships with potential offtakers from China, Korea and Japan.”

Core Exploration’s proposed Finnis project comprises an open pit mining operation and a 1 million tonne-per-annum processing facility which would produce high-grade spodumene concentrate.

The company’s pre-feasibility study indicates the operation would produce around $365 million in revenue over its 26-month mine life.

Core Exploration’s PFS indicated the mine would cost around $53.5 million to develop.

Mr Biggins said the company would focus on formalising its arrangements with Shandong RuiFu within the next several weeks.