Ann: Pilbara Signs Off-Take Agreement to Supply DSO, page-2

PILBARA SIGNS OFF-TAKE AGREEMENT TO SUPPLY DIRECT SHIPPING ORE TO LEADING CHINESE LITHIUM GROUP

Innovative off-take deal will see mining commence at Pilgangoora ahead of schedule in Q2 2017 with first ore deliveries targeted by mid-year, bringing forward project revenues and cash-flow

HIGHLIGHTS:

•   Off-take agreement signed with Chinese lithium carbonate (Li2CO3) producer Shandong Ruifu Lithium Co. Limited (Shandong Ruifu) for the supply of crushed but unprocessed Direct Shipping Ore (DSO).
  
  
•   DSO to be supplied, at Pilbara’s election, from either its 100%-owned Pilgangoora Lithium-Tantalum Project in Western Australia, or the adjoining higher grade Lynas Find Lithium Project (subject to completion of its acquisition by the Company).
  
  
•   The innovative agreement is for the supply of 1.9Mt of run-of-mine (ROM) 1.5% lithia ore over approximately a 2-year term, targeting first deliveries from July 2017.
  
  
•   The agreement includes a US$10M pre-payment by Shandong Ruifu.
  
  
•   Off-take pricing is fixed at an attractive $US price per dry metric tonne of ore to Pilbara (1.5% Li2O, CIF China basis) delivering a healthy operating margin, with final pricing outcomes subject to certain credits or penalties as determined by the shipped grade (minimum specification, 1.4% Li2O).
  
  
•   Shandong Ruifu is an established supplier of lithium products and materials to the fast-growing lithium- battery industry in China, producing lithium carbonate products in East China, with lithium hydroxide production planned in the near future.
  
  
•   Pilbara is also negotiating a separate off-take agreement for the supply of spodumene concentrate to Shandong Ruifu, which is hoped to be finalised shortly, in addition to the existing off-take agreement with General Lithium Corporation for 140,000tpa of spodumene concentrate.
  
  
•   The ROM off-take agreement represents a mutually beneficial outcome, providing significant early stage project revenues for Pilbara during the construction and ramp-up phase and providing for the early delivery of lithia units for Shandong Ruifu to assist in their production expansion plans.
  
  Australian lithium developer Pilbara Minerals Limited (ASX: PLS) (“Pilbara” or “the Company”) is pleased to advise that it has taken another major step towards financing and development of its 100%-owned Pilgangoora Lithium- Tantalum Project, located near Port Hedland in Western Australia, after signing a second off-take agreement with a Chinese lithium group for the early supply of direct shipping ore (DSO).
  
  The off-take agreement with Shandong Ruifu provides for the delivery of crushed but unprocessed ROM ore from either the Pilgangoora Project or, at Pilbara’s election, the adjoining higher grade Lynas Find Lithium Project (upon completion of its acquisition by the Company), from as early as July 2017. This will provide significant revenues during project construction and ramp-up phase and paves the way for a further off-take agreement with Shandong Ruifu for spodumene concentrate which is currently being finalised.
  
  Under the agreement, Pilbara will supply a total of 1.9 million tonnes of unprocessed ROM product with a specification of 1.5% Li2O and 5% moisture level (shipment rejection below 1.4% Li2O).