PERTH (miningweekly.com) – ASX-listed Pilbara Minerals has signed a long-term offtake and financing support agreement with China’s Jiangxi Ganfeng Lithium over the Stage 1 production of the Pilgangoora lithium/tantalum project, in Western Australia.

The Stage 1 offtake agreement comprises 160 000 t/y of chemical-grade spodumene concentrate, over an initial ten-year term, with two five-year options to extend for up to a further ten years.

Once Pilbara has completed a definitive feasibility study, and taken a decision to proceed with the Stage 2 expansion of the Pilgangoora project, which will double the project capacity to four-million tonnes a year, the two companies will enter into a new offtake agreement for an additional 25% of the expanded production of Stage 2, capped at 75 000 t/y.

In addition, Ganfeng Lithium has agreed to offer a cash prepayment or debt facility to help fund the development of the Stage 2 expansion, in return for an additional 25%, and up to a total of 50% of the Stage 2 production, capped at 150 000 t/y.

The additional 25% of the Stage 2 production is conditional upon the parties entering into a facility agreement on terms acceptable to Pilbara.

Pilbara MD Ken Brinsden said on Tuesday that the agreement with Ganfeng Lithium and a previous agreement with General Lithium underscored the importance of the Pilgangoora project as a leading supply solution for lithium raw material demand.

“We are delighted to have reached agreement with one of the world’s pre-eminent and fastest growing integrated lithium companies, and we welcome Ganfeng as a long-term partner at Pilgangoora.”

In a separate subscription agreement, Ganfeng Lithium’s subsidiary has also agreed to subscribe for shares in Pilbara worth no less than $20-million in any equity placement to be undertaken by the company, to contribute towards funding of the Stage 1 project.

Ganfeng could also subscribe for additional shares in the placement, provided that the total number of shares in Pilbara does not exceed 4.9%.

The Pilgangoora project will be commissioned later this year.