ASX/Media Announcement 2 May 2017 PILBARA SIGNS BINDING LONG...

ASX/Media Announcement 2 May 2017
PILBARA SIGNS BINDING LONG TERM OFF-TAKE AND
FINANCING SUPPORT AGREEMENT WITH GANFENG LITHIUM
Off-take agreement encompasses balance of Stage 1 production (160,000tpa SC6.0 product)
plus participation in up to 50% of off-take and longer-term funding support for Stage 2
HIGHLIGHTS:
• Long-term off-take agreement executed with leading integrated Chinese lithium producer, Jiangxi Ganfeng
Lithium Co Ltd and its subsidiary (“Ganfeng Lithium”) for Stage 1 (2Mtpa operation) of Pilbara’s flagship
Pilgangoora Lithium-Tantalum Project in WA.
• The Stage 1 off-take agreement comprises 160,000tpa of chemical grade spodumene concentrate (SC6.0
basis) over an initial 10-year term, with two five year options to extend for up to a further 10 years.
• Upon a decision to develop Stage 2 (4Mtpa), Pilbara will supply Ganfeng Lithium with an additional 25% of
the Pilgangoora Project’s expanded Stage 2 production of chemical grade spodumene concentrate.
• Up to 50% of Stage 2 production (maximum 150,000tpa of Stage 2 expanded production in total) to be
provided in off-take, contingent on Ganfeng Lithium providing Stage 2 funding commitments
commensurate with its final off-take position.
• Complementary funding commitments from Ganfeng Lithium include:
o Firm participation of not less than US$20 million as an investor in Pilbara’s remaining financing to
complete Stage 1 of the Pilgangoora Project; and
o Provision of debt funding or off-take pre-payment to support the development of the Stage 2
expansion (4Mtpa) for the Pilgangoora Project, with the funding amount to be commensurate with
its final off-take position under Stage 2.
• Pilbara’s Stage 1 chemical grade spodumene concentrate (SC6.0 basis) is now fully sold to both General
Lithium and Ganfeng Lithium, paving the way for the Company to complete the balance of funding required
for Stage 1 of the Pilgangoora Project.
• Both off-take agreements include downside price protections to provide Pilbara with confidence that it
can operate profitably above its expected operating cost base, as well as an attractive off-take pricing
formula based on market reference data for battery grade lithium carbonate pricing comprising both
Chinese domestic and import price outcomes. This is designed to ensure that Pilbara benefits from both
the current and expected future demand for lithium carbonate in China.
Australian lithium developer, Pilbara Minerals Limited (ASX: PLS) (“Pilbara” or “the Company”), is pleased to
announce that it has taken a major step towards its objective of becoming a leading low-cost global lithium
producer after completing final off-take arrangements for its chemical grade spodumene concentrate production
(SC6.0 basis) from its 100%-owned Pilgangoora Project in the Pilbara region of Western Australia.
Today’s announcement, together with the previously announced binding off-take agreement with General Lithium
Corporation (see ASX announcement of 4 July 2016) supports sales of not less than 300,000tpa of spodumene
concentrate (SC6.0 basis) from the Pilgangoora Project, representing 100% of the mine’s Stage 1 chemical grade
spodumene concentrate production.
Founded in 2000, Ganfeng Lithium is listed on the Shenzhen Stock Exchange (SHE: 002460), and has a market
capitalisation of approximately US$4.6 billion. It is one of China’s largest integrated lithium producers, with a total
capacity of around 30,000tpa of LCE (lithium carbon equivalent), and a product suite including lithium metal, lithium
hydroxide, lithium carbonate, lithium fluoride, and lithium chloride.