SINGAPORE (Jan 15): Alliance Mineral Assets’ subsidiary Lithco No.2 has amended its lithium offtake agreement with Burwill Lithium Company (BCLC) and its parent company Burwill Holdings. The amendments took effect from Monday.
Firstly, BCLC will transfer its rights and obligations as the buyer under the long-term offtake agreements to Jiangxi Bao Jiang Lithium Industrial (JBJLIL). JBJLIL is owned 50:50 by BCLC and Jiangte Special Electric Motor Co (Jiangte).
“Transferring the lithium offtake agreements to JBJLIL indicates strong support for the Bald Hill Mine from Jiangte which is increasing its lithium concentrate conversion capacity as it moves towards becoming a significant player in the downstream processing market in China,” says Alliance Mineral in its Tuesday filing.
The amended lithium offtake agreements also provide for a market-linked pricing mechanism, with lower and upper limits of US$680/tonne and US$1080/tonne respectively (FOB 6% Li2O), for the remaining term ending on Dec 31 2022.
As for the remaining 18,000dmt from produced last year, these will be purchased by JBJLIL at the 2018 fixed price of US$880 per dmt FOB at 6% Li2O. ETA for shipping is end of January 2019.
The exclusivity and pre-emptive right clauses have been removed from the amended agreements, thus freeing up Alliance Mineral to diversify its customer base.
In addition, the maximum commitment for concentrate supply under the amended agreements is now 100,000 tonnes in 2019 instead of 80,000 tonnes and 140,000 tonnes for each year between 2020 and 2022 instead of a minimum 100,000 tonnes.
Alliance Mineral said it is also seeking new offtake partners to purchase remaining Stage 1 lithium and Stage 2 lithium concentrate production. Offtake interest has been strong as there is limited uncommitted, high quality, spodumene available from producers for 2019.
Repayments of outstanding interest free offtake prepayments of US$8.8million will also be frozen until 2021. Offtake prepayments remain interest free and repaid at the rate of 15% of the value of each lithium concentrate shipment from 1 January 2021 until repaid.
Lastly, mining schedule for 2019 and 2020 has been revised to accommodate increased ore processing rates expected in the third quarter of 2019.
Alliance Mineral last traded at 25 cents on Dec 20 before trading was halted the next day and subsequently suspended on Dec 27 for the purpose of the announcement.
