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European Lithium signs binding term sheet with Obeikan for hydroxide plant in Saudi Arabia

Australia-based European Lithium Limited signed a binding term sheet for the joint development and operation of a lithium hydroxide processing plant in Saudi Arabia with Obeikan Group to convert lithium concentrate into lithium hydroxide.

Tony Sage, Chairman of European Lithium, said the new facility, once operational, was expected to significantly reduce energy costs and deliver savings in Opex, in addition to lower Capex, for operations at the company’s Wolfsberg Lithium Project.

We are pleased to reach this strategic step in partnering with Obeikan that paves the way for significant Opex savings including greatly reduced energy and financing costs, and a much lower taxation rate. We look forward to progressing our plans to harness the latest technology in developing a facility of the highest quality and efficiency, in doing so, strengthen the economics of Wolfsberg and our future projects.

—Tony Sage

The 50:50 JV will be geared towards developing, constructing and commissioning a lithium hydroxide processing plant, and operating the plant for the conversion of lithium spodumene concentrate from Wolfsberg in stages.

Under the JV term sheet, the proposed JV will seek to have an exclusive right to purchase spodumene mined from the current resource at Wolfsberg (Zone 1), and the facility is expected to be developed to meet the minimum initial capacity and product specifications based on the company’s binding long-term supply agreement with BMW.

Subject to the successful commissioning of the plant, European Lithium will sell the lithium spodumene concentrate to the JV company at a reduced rate with a floor price of US$3,000/t and a ceiling price of US$7,000/t over the life of the current resource of the Wolfsberg mine.

Additional key terms include:

  • European Lithium and Obeikan will establish a new joint venture company(s) in Saudi Arabia (JVCo) and enter into shareholders agreement to reflect 50:50 JV ownership.

  • In the event the business combination agreement with Sizzle Acquisition Corp completes, the company agrees to procure the assignment of its rights and obligations under the JV Term Sheet to Critical Metals Corp (CRML) or one of its wholly owned subsidiaries, subject to approval by the CRML Board.

  • Completion of the transaction is subject to verification from the Saudi Industrial Development Fund (SIDF) and an external valuation regarding the treatment of the in-kind contribution to be made to the JV by the company.

  • The parties are required to contribute to the equity funding of JVCo in accordance with their respective shareholding in JVCo. Based on the outcome of a valuation of in-kind contribution, European Lithium might not be required to contribute any cash to the JV.

  • The establishment of a Development Committee for the purposes of jointly collaborating on all key decisions in relation to the development of the Plant.

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