Argosy Minerals enters transformational binding off-take with...

Argosy Minerals enters transformational binding off-take with Chinese battery company

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10:05 17 Aug 2017
Argosy executes binding investment and off-take agreements.
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Cornerstone shareholding at a premium
Argosy Minerals Ltd (ASX:AGY) has signed binding investment and off-take agreements for a company-transforming transaction.

The agreement will see Argosy establish a strategic relationship with one of China’s fast growing battery materials companies – Qingdao Qianyun High-tech New Material Co. Ltd.
The upfront transaction funds exceed the Stage 2 development expenditure budget for the Rincon Lithium Project in Argentina, securing Argosy’s foreseeable future as a commercial lithium producer.
The transaction includes A$26.4 million to be received upfront through an equity placement and prepayment under a 1-year preliminary off-take agreement

Argosy is targeting lithium carbonate equivalent production in early 2018.

Jerko Zuvela, managing director, commented:
"This transaction represents a company-transforming event and we are confident that it provides a strategy for unlocking the immediate value of our strong position in Argentina via fast-tracked development of the Rincon Lithium Project.

"On completion of this transaction, Argosy will have substantial funding (together with its technical and processing expertise), plus a strategic shareholder and customer in Qinyuan – one of China’s fast growing battery materials companies, to fully develop and maximise the potential of Rincon, and exploit the insatiable demand growth of the battery grade LCE market."

Argosy is earning up to a 90% interest through multiple stages in the Rincon joint venture, which is located in the “Lithium Triangle” of Salta Province.
Cornerstone shareholding at a premium

The placement of shares to Qianyun comprises a 19.9% stake in the company at an issue price of $0.085, raising circa A$16.9 million.

The price represents a 7.6% premium to the 30 day volume weighted average.
The transaction also includes a US$7.5 million (A$9.55 million) upfront prepayment for an agreed quantity of battery grade lithium carbonate equivalent (LCE) product during the first year of production at Rincon, under the terms of a Preliminary Off-take Agreement.

Argosy will also appoint Qianyun’s chairman, Mr Sun Qi, as a non-executive director subject to and with effect from Tranche 1 completion.
Long term off-take

There is a separate five-year long-term off-take agreement for 1,000 tons per year of potential Stage 2 product from years two to six of production of battery grade LCE product from Rincon.

The sale price is based on a formula derived from the China battery grade lithium carbonate import price.

Argosy and Qianyun have agreed for Qianyun to have a limited right to provide an offer for funding of capital expenditure for Stage 3 development of Rincon, for which potential production is currently uncontracted.
Lithium opportunities in China

A joint venture agreement is to be established for Argosy and Qianyun to collaboratively consider acquisition and development of lithium project opportunities in China during the next two years.
Timeline for Stage 2

Argosy is targeting the first set of the Stage 2 pond construction works to be completed during September.
Additional ponds are being scheduled, and pending approvals, are targeted for completion during October.

This will result in a combined total of ~10 hectares of newly constructed evaporation ponds.
The ponds are being fast-tracked to meet the commencement of the peak solar evaporation season, which usually begins during September and continues until April.

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