Liontown executes Binding Offtake Agreement with Ford, together with a debt facility for the Kathleen Valley Lithium Project.
Liontown Resources Limited (ASX: LTR) (Liontown or the Company) announce that it has executed a binding Offtake Agreement and Funding Facility with leading global automaker Ford Motor Company.
The Offtake Agreement with Ford is for the supply of up to 150,000 DMT per annum of spodumene concentrate – a source of lithium essential in key EV battery chemistries. The spodumene concentrate will come from Liontown’s flagship 100%-owned Kathleen Valley Lithium Project in Western Australia for five years.
The agreement represents Liontown’s third and final foundational offtake required to underpin the development of Kathleen Valley – marking the culmination of the disciplined execution of its offtake strategy.
Together with the previously announced binding full-form offtake agreements with Tesla (refer to ASX announcement 6 June 2022) and LG Energy Solution (refer to ASX announcement 2 May 2022), Liontown’s total offtake commitments now stand at up to 450,000 DMT per annum of spodumene concentrate, representing approximately 90% of Kathleen Valley’s start-up SC6.0 production capacity of ~500ktpa.
The remaining production from Kathleen Valley is intended to be retained for spot volume sales and/or discrete offtake agreements. Supply to Ford is expected to commence in 2024, with volumes of 75,000 DMT of spodumene concentrate in year one of operations, increasing to 125,000 DMT in year two and 150,000 DMT for years three to five of the initial five-year term.
The commercial terms of the Offtake Agreement reflect the continued strength in demand for
spodumene concentrate and were not subsidised by the Funding Facility.
Under a separate Funding Facility, a Ford subsidiary will provide a A$300 million debt facility to Liontown, with the proceeds to be used towards partially funding the development costs of Kathleen Valley.
The Funding Facility, together with the A$463 million raised by Liontown in December 2021, means that Liontown has now secured commitments for the required funds to support the full development of the Project through to first production.
The material terms of the Offtake Agreement and Funding Facility are provided in Appendix A.
The finalisation of debt funding, along with completion of foundational offtake arrangements, paves the way for a Final Investment Decision for the Project.
Tony Ottaviano, Liontown’s Managing Director and CEO, said:
The signing of our third and final foundational offtake agreement is a momentous milestone for Liontown and the Kathleen Valley project, with approximately 90% of Kathleen Valley’s start-up capacity now under secured long-term binding offtake agreements.
“Our disciplined approach to our offtake strategy has enabled us to build a customer base of Tier-1, globally significant customers in the EV battery supply chain, validating Kathleen Valley’s status as a globally relevant lithium asset.”
“In addition to the offtake, the A$300 million funding facility from Ford, together with the capital raised last year, means that we have secured commitments for the funds required to support the full commercial development of Kathleen Valley through to first production.”
Lisa Drake, Ford’s vice president of EV Industrialization added:
Ford continues working to source more deeply into the battery supply chain to meet our goals of delivering more than 2 million EVs annually for our customers by 2026.
“This is one of several agreements we’re working on to help us secure raw materials to support our plan to deliver EVs for customers around the world and meet our environmental, social and governance commitments.”
About Kathleen Valley
Kathleen Valley is a new, globally significant, lithium development project located 680km north-east of Perth in Western Australia’s premier mining district. Underpinned by a world-class lithium deposit with a Mineral Resource Estimate of 156Mt at 1.4% Li2O and 130ppm Ta2O5, Kathleen Valley is forecast to initially produce ~500ktpa of SC6.0 spodumene concentrate expanding to ~700ktpa.
The Project also has an integrated and value-adding ESG focus with greater than 60% renewable power supply planned at start-up and a strong working relationship with the Traditional Owners of the land (the Tjiwarl).
About Ford Motor Company
Ford Motor Company (NYSE: F) is a global company based in Dearborn, Michigan, that is committed to helping build a better world, where every person is free to move and pursue their dreams.
The company’s Ford+ plan for growth and value creation combines existing strengths, new capabilities and always-on relationships with customers to enrich experiences for and deepen the loyalty of those customers.
Ford develops and delivers innovative, must-have Ford trucks, sport utility vehicles, commercial vans and cars and Lincoln luxury vehicles, as well as connected services. Additionally, Ford is establishing leadership positions in mobility solutions, including self-driving technology, and provides financial services through Ford Motor Credit Company. Ford employs about 182,000 people worldwide.
More information about the company, its products and Ford Credit is available at corporate.ford.com.
Highlights
- Liontown and Ford have executed a definitive binding full-form offtake agreement (Offtake Agreement), the third and final foundational offtake required to underpin development of Liontown’s Kathleen Valley Lithium Project (Kathleen Valley or the Project).
- The Offtake Agreement for the supply of up to 150,000 dry metric tonnes (DMT) per annum will have an initial term of 5 years from the commencement of commercial production (expected in 2024).
- Ford and Liontown have also executed a binding full-form funding facility agreement (Funding Facility) with respect to a A$300 million debt facility to be used for the Project’s development.
- This Funding Facility, together with the proceeds from Liontown’s A$463 million capital raise in December 2021, paves the way for a Final Investment Decision for the Project.
Liontown has secured a third foundational Offtake Agreement with leading global automaker Ford,
together with a debt facility for the Kathleen Valley Lithium Project, June 29, 2022
