The Pilbara Minerals Ltd (ASX: PLS) share price is charging higher on Tuesday morning.
At the time of writing, the lithium miner's shares are up almost 5% to $4.19.
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Why is the Pilbara Minerals share price jumping?
Investors have been bidding the company's shares higher today after it announced a new offtake agreement.
According to the release, Pilbara Minerals has executed a new offtake agreement with Sichuan Yahua Industrial Group (Yahua) for the supply of spodumene concentrate from its 100% owned Pilgangoora Operation.
Yahua is a leading lithium chemicals company and one of the largest lithium hydroxide producers globally. It has strong connections across the lithium supply chain with key customers including Tesla, LG Energy Solutions, LG Chem, and CATL.
Pilbara Minerals advised that the agreement starts in 2024 and will be for the following supply:
- 2024: 20kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals' election) resulting in a total supply of between 20kt to 80kt.
- 2025: 100kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals' election) resulting in a total supply of between 100kt to 160kt.
- 2026: 100kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals' election) resulting in a total supply of between 100kt to 160kt.
Management notes that consistent with its other existing agreements, all spodumene concentrate volumes will be sold based on the prevailing market price.
'Delighted'
Pilbara Minerals' managing director and CEO, Dale Henderson, was very happy with the news. He said:
We are delighted to have signed this offtake agreement with Yahua, a leading global lithium chemicals producer which has extensive supply chain relationships with major battery materials customers globally.
This offtake builds-on an established relationship between our companies, having previously completed a number of sales together. The agreement enables Yahua to further expand its supply chain commitments with key global battery customers and builds-out Pilbara Minerals medium-term sales profile whilst preserving long-term optionality as we assess downstream opportunities in-line with our growth strategy.
The Pilbara Minerals share price is up 8% over the last 12 months.
