The Vulcan Energy Resources Ltd (ASX: VUL) share price is on the move on Monday morning.
In early trade, the lithium explorer's shares are up 9% to $10.19.
Why is the Vulcan share price taking off today?
Investors have been bidding the Vulcan share price higher today after it released a positive announcement.
According to the release, the company has signed a binding lithium hydroxide offtake agreement with LG Energy Solution.
LG Energy Solution is the largest producer of lithium-ion batteries for electric vehicles in the world and supplies its products to top global OEMs.
The release advises that LG Energy Solution will purchase 5,000 metric tonnes of battery grade lithium hydroxide for the first year of the supply term. After which, this will ramp up to 10,000 metric tonnes per year during the second and subsequent years of the five-year supply term.
The agreement can be extended by a further five years and is expected to commence in 2025 following the first commercial delivery. Pricing will be based on market prices for lithium hydroxide.
Management commentary
Vulcan's Managing Director, Dr. Francis Wedin, was very pleased to have signed the first lithium offtake agreement for its Germany-based Zero Carbon Lithium Project.
Dr Wedin commented: "This is the first binding lithium offtake term sheet for the Zero Carbon Lithium Project, so it is fitting that it is with the largest EV battery producer in the world."
"LGES's operations are of course global, but it is already producing batteries in Europe. The agreement is in line with our strategy to work with Tier One battery and automotive companies in the European market. We look forward to a long and productive relationship with LGES," he concluded.
Following today's gain, the Vulcan share price is up 270% since the start of the year.
