The Australian Mines Limited (ASX: AUZ) share price soared into the green in morning trade, and has held its ground since.
Today's gain comes as Australian Mines confirmed a binding offtake agreement in an earlier announcement.
Let's investigate further.
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A quick recap on Australian Mines
Australian Mines is a resource company with concentrated efforts in the exploration of battery metals.
The company is developing cobalt-scandium-nickel projects in Australia, such as the Sconi Project and Bell Creek Nickel-Cobalt Project.
At the time of writing, Australian Mines has a market capitalisation of $86 million.
What did Australian Mines announce?
In a positive for the Australian Mines share price, the company announced it had entered into a binding long-form offtake agreement with LG Energy Solution Australia.
The agreement is for the supply of mixed nickel-cobalt hydroxide from Australian Mines' Sconi Project, which is located in North Queensland.
In addition, LG Energy Solution, owned by LG Chem, is "the world's largest producer of advanced batteries for the electric vehicle industry," as per the release.
Under the agreement, LG Energy will initially purchase 71,000 dry metric tonne of nickel, plus 7,000 dry metrics tonne of cobalt. Both will be purchased in the form of mixed hydroxide precipitate (MHP).
MHP is a nickel- and cobalt-containing material. It is used as a raw material input for lithium-ion battery production, according to Australian Mines.
Furthermore, one covenant embedded into the agreement is that Australian Mines must secure financing to construct the Sconi Project. The deadline for this is "on or before 30 June 2022".
As such, the company will "now move swiftly" to ensure that agreements with financing partners are finalised.
Investors have favoured the update and are buying Australian Mines shares in droves since the market open.
Australian Mines shares are now exchanging hands at 2.6 cents apiece, a 30% climb on the day.
Australian Mines share price snapshot
The Australian Mines share price has posted a return of 66% this year to date. That extends the previous 12-month climb of 20%.
The returns have outpaced the S&P/ASX 200 Index (ASX: XJO) return of around 25% over the past year.
