Australia’s Core Lithium has signed a binding offtake agreement with lithium producer Jiangxi Ganfeng Lithium for its Finniss project in the Northern Territory.

According to the transaction, a subsidiary of Jiangxi Ganfeng Lithium will purchase 300,000 dry metric tonnes of spodumene concentrate at 75,000tpa from the Finniss project over four years.

The agreement, along with the existing supply deal with Sichuan Yahua, accounts for approximately 80% of production from the project over the first four years of mine life.

In a press statement, Core said: “The offtake provides for pricing referenced to the market price for 6.0% Li₂O spodumene concentrate, adjusted for actual Li₂O content, and includes an agreed floor price.”

Moreover, Ganfeng has agreed to make an equity investment of $24.9m (A$34m) into Core Lithium at $24.8 (A$33.8) cents per share.

Core said that the investment will contribute towards the development of stage one of the Finniss lithium project.

The investment is subject to the Core shareholder approval, regulatory approvals in China, and Core signing binding arrangements for a minimum total financing of $58.7m (A$80m).

Core managing director Stephen Biggins said: “The offtake and equity investment by Ganfeng represents a transformational moment for Core.

“Ganfeng has a proven track record of investing in high-quality lithium projects across the world and of being a strong and supportive offtake partner.”

The Finniss lithium project involves the development of open-pit spodumene lithium mine and a processing plant.

Core intends to complete construction on the project in the second half of 2021 with plans to start production in late 2022.

The Australian Government awarded major project status for the Finniss Lithium Project in March 2021.