Reed Industrial Minerals (RIM), the jointly owned subsidiary of Neometals and Mineral Resources, has signed an offtake and funding agreement with Chinese lithium producer Jiangxi Ganfeng Lithium.
Under the memorandum of understanding (MoU), Ganfeng will acquire an up-front 25% shareholding in RIM by way of share sale and equity subscription.
Neometals will own 45% stake in RIM, while Mineral Resources will retain 30%.
Neometals will grant options to Mineral Resources and Ganfeng to increase their respective shareholdings in RIM to 43.1% around the fourth quarter of 2016.
If the options are exercised completely, Neometals will be left with 13.8% of RIM.
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After a fixed-price mining services contract, MIN will build, own and operate the Mount Marion mining, crushing and beneficiation infrastructure as well as equipment.
The MoU will set-out key commercial terms under which Ganfeng will enter a long-term offtake for 100% of the spodumene produced from the Mt Marion Lithium Project.
Under the agreement, starting from the fourth year, RIM has an option to take 51% of the total production if greater commercial benefit can be derived from such product.
Execution and financial close of the MoU is scheduled for 31 August.
Upon financial close, a final investment decision will be made for the Mt Marion lithium concentrate operation along with commencement of full plant construction and assemblage.
Commissioning and production of lithium concentrate product are expected by mid-2016.