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European Lithium sign agreement with Obeikan Group

 European Lithium sign agreement with Obeikan Group

European Lithium and Obeikan Group sign MoU.

European Lithium, a mining exploration and development company focusing on its wholly owned Wolfsberg Lithium Project, on Friday said that it has entered into an agreement with Saudi Arabia’s Obeikan Group to jointly develop and operate a lithium hydroxide processing plant in Saudi Arabia.

Brands and Business Magazine

As part of the deal, European Lithium, which is listed on Austria’s stock exchange (ASX), and Obeikan will establish a new joint venture company (JVCo) in Saudi Arabia and enter into shareholders agreement to reflect 50:50 JV ownership.

Both companies 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.

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

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

“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.”

Abdallah Obeikan, CEO of the Obeikan Investment Group said that they were convinced that the partnership will be beneficial for all stakeholders. This partnership will combine European Lithium’s expertise with the industrial knowledge of Obeikan and the strength of Saudi Arabia, he said.

JV summary

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.

The proposed JV will seek to have an exclusive right to purchase spodumene mined from the current resource at Wolfsberg (Zone 1) in Austria, 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 JVCo at a reduced rate with a floor price of $3,000/t and a ceiling price of $7,000/t over the life of the current resource of the Wolfsberg mine.

Brands & Business Magazine


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