Core Lithium Ltd (ASX: CXO) shares are on the move on Monday.
At the time of writing, the lithium miner's shares are up over 4% to 7.3 cents.
Why are Core Lithium shares jumping?
Investors have been bidding Core Lithium's shares higher today after it reached a settlement agreement with Chinese firm Yahua International Investment and Development Company. This potentially paves the way for the restart of its Finniss Lithium Operation in the Northern Territory.
According to the release, Core Lithium has terminated its legacy offtake agreement with Yahua, which was first signed in 2019 and later updated in 2022. The deal was formally ended through a legally binding deed of release.
As part of the settlement, the company has agreed to make a US$2 million payment in cash, which it stated can be comfortably covered from current cash reserves.
At the end of last month, Core Lithium released its quarterly report and revealed that it had a cash balance of $30 million.
A step forward
Commenting on the news, Core Lithium's CEO, Paul Brown, said the agreement reflects the long-standing relationship between the two companies and believes that it gives the business a cleaner strategic runway. He said:
We appreciate the constructive approach of Yahua in reaching this agreement, which reflects the long relationship between our two companies. The settlement of this legacy offtake agreement provides greater scope and opportunity for securing strategic funding sources to support a future restart of the Finniss Lithium Operation, which remains subject to Board approval.
Is this good news?
While lithium markets remain volatile and investor sentiment around juniors has been cautious, this latest development could give Core Lithium more strategic options in securing new partnerships, funding, or offtake agreements — ones that better reflect current market conditions and the company's restart ambitions.
It also removes a potential legacy complication at a time when the company may be looking to reposition itself as a near-term lithium producer, depending on the study outcome and broader market dynamics.
Should you invest?
Goldman Sachs has yet to respond to this news, but currently has a neutral rating and 8 cents price target on Core Lithium's shares. It said:
Ongoing risk to restart timing: In the current pricing environment, a mine restart looks highly unlikely near-term, with completion and release of the restart study planned for 2H FY25.
Core Lithium's shares are down 48% over the past 12 months.
