European Lithium inks key agreement with Obeikan for lithium hydroxide plant in Saudi Arabia

European Lithium Ltd (ASX:EUR, OTCQB:EULIF) has signed a binding term sheet with Saudi-based Obeikan Group to jointly develop and operate a lithium hydroxide processing plant in Saudi Arabia through an incorporated 50:50 joint venture.

The processing plant capital investment will be fully funded through the JV, with EUR’s equity contribution expected to be in-kind, subject to a valuation.

Under the agreement, EUR will grant the JV company exclusive purchasing rights to spodumene mined from its Wolfsberg Lithium Project in Austria.

This new agreement marks a significant milestone for the company, as the JV aims to convert lithium concentrate into lithium hydroxide, meeting the specifications of a long-term supply agreement with BMW.

In other developments, EUR expects final SEC approvals for the NASDAQ listing of Critical Metals Corp. by the end of this month.

Plant to strengthen Wolfsberg economics

EUR chairman Tony Sage said the new facility, once operational, is expected to significantly reduce energy costs and deliver savings in opex (operational expenditure), in addition to lower capex (capital expenditure), 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,” Sage said.

“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.”

JV highlights

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

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, EUR will sell the lithium spodumene concentrate to the JV company at a reduced rate with a floor price of US$3,000 per ton and a ceiling price of US$7,000 per ton over the life of the current resource of the Wolfsberg mine.

Should the business combination agreement with Sizzle Acquisition Corp complete, European Lithium has agreed 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.