Mining and exploration group European Lithium [ASX:EUR], owner of the Wolfsberg Lithium Project in Carinthia, has today announced it has signed a binding agreement for a joint development — a new lithium processing plant located in Saudi Arabia.
This deal has been struck with Obeikan Investment Group and will convert lithium concentrate into lithium hydroxide, as sourced from Wolfsberg.
The lithium product is to be sold at a reduced rate, a floor price of around $3,000 a tonne over the life of the current resource base.
EUR stocks were selling for 10 cents at the time of writing, having improved value by 35% so far in 2023. It delivered a 38% increase on the 12-month average stock increase compared with the rest of the stocks within its industry:
Source: tradingview.com
European Lithium’s 50/50 joint venture with Obeikan Group
Today it was announced that European Lithium signed a binding agreement to take part in a joint development for a new processing plant to be located in Saudi Arabia.
This agreement has been struck with multinational investors Obeikan and will see the conversion of lithium concentrate into lithium hydroxide from European Lithium’s Wolfsberg project, Europe’s first completely permitted lithium mine, found 270km south of Vienna.
The 50/50 joint venture will consist of such activities as developing, constructing, commissioning, and operating the plant and includes an exclusive right for Obeikan to purchase spodumene mined from Wolfsberg’s Zone 1.
If commissioning for the plant is executed successfully, EUR hopes to sell the lithium spodumene concentrate to its partner at a reduced rate.
The floated floor price was $3,000 a tonne, and a ceiling price estimate of $7,000 per tonne, a discount that could last as long as the Wolfsberg mine’s current resource will stretch.
The lithium miner reports that its total capex needed to put this project together is to reach the range of between $800–900 million, reducing energy costs and delivering savings in OpEx.
For Saudi Arabia, this project is one of the latest in a string of deals signed to bolster its standing in EV production.
Earlier in the year, Saudi Arabia had also signed with another Australian battery manufacturer (EV Metals) in the hope of developing another lithium hydroxide plant due for production by 2026.
It has been reported that Saudi Arabia aims to produce around 500,000 vehicles every year by 2030.
This newest facility is expected to take some time and careful development, but it is also hoped to meet certain minimum product specifications, which are to match the company’s binding long-term supply agreement with BMW.
As for European Lithium, aside from expanding its own stake in the lithium and EV supply chain, the company is also angling to enter a secondary listing on the Nasdaq in the coming months.
Chairman of Europe Lithium, Tony Sage, commented:
‘This strategic step in partnering with Obeikan paves the way for significant Opex savings including greatly reduced energy and financing costs, and a much lower taxation rate.
‘We look forward to progressing our plans to harness the latest technology in developing a facility of the highest quality and efficiency, in doing so, strengthen the economics of Wolfsberg and our future projects.’
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