Emerging lithium-boron producer Ioneer [ASX:INR] announced a commercial three-year offtake agreement with Dragonfly Energy Holdings Corp., an industry leader in energy storage.
As a result of the new partnership, INR shares were soaring by more than 9% by the early afternoon.
At 38 cents a share at the time of writing, INR has increased its stock value by 33% in the past month, and 25% in the last week.
However, it’s in the red by 34% for its sector average and by 27% against the wider S&P, considerably below high flyers Liontown [ASX:LTR] and Anson [ASX:ASN]:
Source: TradingView
Ioneer and Dragonfly partner in the name of US lithium supply
Ioneer says that it signed an agreement partnership with Dragonfly Energy in order to chase a stronger hold on U.S. battery supply chain and invest in the production and manufacturing of Nevada-sourced lithium.
Ioneer says the agreement between the two Nevada-based companies will allow for continued investment in the US and provide Dragonfly with a supply of lithium carbonate, a critical component in lithium iron phosphate battery cells.
But who is Dragonfly Energy, and what does the offtake entail?
Dragonfly is a leading supplier of deep-cycle lithium-ion batteries. Its research and development initiatives are said to be revolutionizing the energy storage industry through innovative technologies and manufacturing processes.
It has been noted that Dragonfly’s non-toxic deep-cycle lithium-ion batteries are displacing lead-acid batteries across a wide range of end-markets including RVs, marine vessels, off-grid installations and other storage applications.
Ioneer’s lithium carbonate product will fuel these products and processes and is scheduled for a variable number of surplus tones over a three-year contract period.
That period will only begin once Ioneer notifies Dragonfly of full commissioning and related procedures in accordance with the engineering, procurement and construction contract.
Only then will Ioneer’s project be capable of producing and delivering product to customers who have annual commitments to purchase in excess of 3,000 tpa.
Pricing will be based on a market formula (in $US per metric ton) and is conditional on Ioneer’s Final Investment Decision.
Shareholders were evidently buoyant on the decision and what it could mean for Ioneer’s future in lithium concentrate production. Furthermore, certainty in a supply chain and clarity of end product are always good signs for these mining, exploration and production companies.
In Ioneer’s March quarter report, the group said it had increased it mineral resource by 168% to 3.4 Mt lithium carbonate equivalent (LCE).
And in February, the group had secured 5,000 tpa of lithium offtake commitment from EcoPro. This represents approximately 34% of Ioneer’s annual lithium carbonate production from Rhyolite Ridge in the first three years of operation.
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