LG Energy Solution and Green Technology Metals Limited (GT1), an Australia-based, North America-focused multi-asset lithium business, signed an equity subscription agreement and an offtake term sheet in relation to future production from GT1’s flagship Seymour Project in North America. (Earlier post.)
GT1’s main 100%-owned Ontario Lithium Projects comprise high-grade, hard rock spodumene assets (Seymour, Root and Wisa) and lithium exploration claims (Allison and Solstice) located on highly prospective Archean Greenstone tenure in north-west Ontario, Canada. Seymour has an existing Mineral Resource estimate of 9.9 Mt @ 1.04% Li2O (comprising 5.2 Mt at 1.29% Li2O Indicated and 4.7 Mt at 0.76% Li2O Inferred) and Root has an Inferred Mineral Resource Estimate of 4.5 Mt @ 1.01% Li20.
Under the Subscription Agreement, LGES will subscribe for 21,739,130 new shares in GT1 at a price of A$0.92 per share, for total proceeds of A$20 million (US$13.2 million). The subscription price is at a material premium to recent trading in GT1, recognizing the strategic nature of the investment into GT1 and associated offtake rights, and represents 7.89% of GT1’s ordinary shares on issue.
The issue price of A$0.92 per share represents a 28% premium to the 90-day VWAP at close on May 18, 2023.
Pursuant to the Offtake Term Sheet, GT1 will sell to LGES 25% of its spodumene concentrate production from Seymour for a period of 5 years from the commencement of commercial production at Seymour.
In the event that GT1 develops a lithium hydroxide conversion facility during this period, GT1 will deliver the equivalent lithia content to LGES in the form of lithium hydroxide.
The pricing for both spodumene and lithium hydroxide has been agreed based on a formula linked to the prevailing market price of lithium hydroxide. The parties have agreed to enter into a full form offtake agreement by August 2023.
The funds received will be used to continue the rapid progression of Seymour through exploration and feasibility. The Preliminary Economic Assessment (PEA) remains underway and is now expected to be finalized and announced in the coming weeks.
The agreement marks a new extension of LGES’ continued efforts to establish a critical mineral supply chain in North America. The company’s production capacity in the region will eventually reach approximately 300 GWh, representing the largest share of its global production network, and thus LGES has been proactively engaging in opportunities to secure a stable local supply chain to produce its battery products in scale and with speed.