PERTH (miningweekly.com) – The share price of ASX-listed junior Core Lithium rose significantly on Wednesday after the company announced a binding offtake agreement with electric vehicle giant Tesla.

Core entered into a legally binding term sheet with Tesla for the supply of up to 110 000 t of spodumene concentrate from its Finniss lithium project over a term of four years, with pricing referenced to the market price for spodumene concentrate.

Construction of the Finniss project, in the Northern Territory, started late last year, and first production of lithium concentrate is scheduled for the fourth quarter of this year.

The Stage 1 Finniss project, comprising an openpit operation and underground operation, would require an initial capital investment of A$89-million to support lithium production of 175 000 t/y from a one-million-tonne-a-year plant.

Core on Wednesday told shareholders that the company is fully funded to deliver the Finniss project.

“Subject to execution of a definitive agreement, Core’s supply to Tesla is scheduled to commence in the second half of 2023 and will cease on the date that is four years after commencement of supply or until a total of up to 110 000 dry metric tonnes has been delivered,” said Core MD Stephen Biggins.

“Core Lithium is thrilled to have reached this agreement with Tesla and looks forward to further growing this relationship in the years to come. Tesla is a world- leader in electric vehicles and its investment in offtake and interest in our expansion plans for downstream processing are very encouraging.”

Core's strategy for Finniss currently includes a potential Stage 3 expansion. Stage 3 is based on a longer-term plan for the development of downstream lithium chemical processing in the Northern Territory.

Tesla has agreed, subject to execution of a definitive agreement, to provide additional support to Core to assist with the successful completion of its Stage 3 expansion and the incorporation of Core's lithium chemical product into Tesla's supply chain.