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Alliance Mineral Assets, Burwill Lithium restructure lithium off-take agreements


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Alliance Mineral Assets, Burwill Lithium restructure lithium off-take agreements

Alliance Mineral Assets Ltd. agreed to restructure its long-term off-take agreements with Burwill Holdings Ltd. for the latter to transfer its respective rights and obligations as buyer to Jiangxi Bao Jiang Lithium Industrial Ltd.

Jiangxi Bao Jiang is owned 50% by Burwill Holdings unit Burwill Lithium Co. Ltd. and 50% by Jiangte Special Electric Motor Co. Ltd. The supply will be linked to market prices, varying between US$680/t and US$1,080/t for the remaining term of the original agreement, which concludes at the end of 2022. The previous agreement had the price set at US$880/t.

Alliance said Jan. 15 that the lithium off-take agreements were amended effective Jan. 14, removing exclusivity and pre-emptive rights to allow the company to diversify its customer base. Alliance shares were down nearly 12% by ASX trading close the day of the announcement.

As a result, Alliance is seeking new off-take partners to purchase the remaining lithium concentrate production from the Bald Hill mine in Western Australia.

The company added that Jiangxi Bao Jiang committed to purchase the remaining 18,000 dry metric tonnes from 2018 production, with shipping expected by the end of January, and to take the first 10,000-dmt shipment in February.

Under the amended agreement, lithium concentrate quantity committed to Jiangxi Bao Jiang is between 80,000 dmt and 100,000 dmt for 2019 and between 100,000 dmt and 140,000 dmt from 2020 to 2022.

The company also said a revised mine schedule for 2019 and 2020 to accommodate increased ore processing rates is expected in the third quarter.

Managing Director Mark Calderwood said Alliance continues to see high demand for spodumene concentrate from Bald Hill, which coincides well with the projected increases in lithium concentrate production from the third quarter.

The company increased production guidance for the first six months of 2019 to between 65,000 dmt and 80,000 dmt lithium concentrate, compared to 55,000 dmt to 60,000 dmt for the second half of 2018.

Alliance noted that lithium concentrate production for the last quarter of 2018 fell 7% short of its guidance to about 22,570 wet tonnes.

The company struck deals in October 2018 to sell tantalum concentrate produced from the Bald Hill.