The market may be charging higher today but that is nothing compared to the gains being recorded by the European Lithium Ltd (ASX: EUR) share price.
In morning trade, the lithium explorer's shares were up as much as 22% to 8.8 cents.
The European Lithium share price has pulled back a touch since then but remains up 15% at 8.3 cents.
Why is this lithium share racing higher?
Investors have been scrambling to buy the company's shares this morning after it announced a binding offtake agreement with auto giant BMW.
According to the release, European Lithium will supply BMW with a total of 50,000 metric tonnes of battery grade lithium hydroxide from the Wolfsberg Lithium Project in Austria.
This is expected to begin in 2026 and continue for six years until 2031, at which point the offtake agreement can be extended for three years. The first year will see the supply of 5,000 metric tonnes to BMW. After which, the agreement is for 9,000 metric tonnes of battery grade lithium hydroxide each year.
Pricing will be based on Fastmarket spot prices for lithium hydroxide with an unspecified discount applied. Though, before all that happens, the agreement is conditional upon the successful start of commercial production and full product qualification and certification.
The release also notes that BMW will make an advanced payment of US$15 million, which will be repaid through equal set offs against the supply delivered to BMW.
'A key milestone'
European Lithium's executive chairman, Tony Sage, appeared to be very pleased with the news. He said:
With the signing of the binding offtake agreement with BMW, our first offtake is secured, and we look forward to partnering with BMW in the future.
The company added:
Securing its first offtake is a key milestone which will allow the Company to focus on the final steps of development and construction of the Wolfsberg Project while it looks to the future and builds a portfolio of prospective battery metals projects located in Europe.
