One of the best performers on the Australian share market on Friday has been the Altura Mining Ltd (ASX: AJM) share price.
In morning trade the lithium miner's shares are up a massive 33% to 24 cents.
Why are Altura Mining's shares rocketing higher today?
This morning Altura Mining announced that it has signed a binding offtake agreement with GFL International Co., Limited, a wholly owned subsidiary of leading global lithium producer in Ganfeng Lithium.
According to the release, the new agreement diversifies its customer base and locks in 100% of planned production from its recently commissioned flagship Altura Lithium operation in Western Australia.
The agreement also provides GFL with the option to increase supply through access to 50% of Altura Mining's Stage 2 expansion production from the Altura Lithium operations.
GFL has committed to a minimum of 70,000 dmt per annum of 6% grade spodumene concentrate at a minimum price of US$550 dmt. It will also make an US$11 million pre-payment on 2019 shipped cargoes.
In addition to this deal, Altura has reached an agreement with existing offtake partner, Shaanxi J&R Optimum Energy, which will reduce its current binding offtake agreement commitment from a minimum of 100,000 tpa to a minimum of 50,000 tpa from 2019 onwards.
Management believes this will provide the company with more flexibility as Shaanxi J&R Optimum Energy concludes its restructuring.
Altura's managing director, James Brown, was happy with the agreements and believe they will "underpin production and should remove any offtake uncertainty."
What now?
I think this announcement will have come as a major relief to shareholders. Not only were there concerns over Shaanxi J&R Optimum Energy's ability to fulfil its original offtake agreement, the company's dwindling cash balance had many predicting that a capital raising was coming.
And while I wouldn't rule one out just yet, the US$11 million pre-payment will certainly help with working capital.
I would still choose Galaxy Resources Limited (ASX: GXY) Orocobre Limited (ASX: ORE) ahead of Altura, but things certainly do look a great deal better for the company now.
