Core Lithium Ltd (ASX: CXO) shares are up 4.75% to 11 cents while the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.2% today.
The ASX lithium share is in the green after it announced it had terminated an offtake agreement with Chinese giant, Ganfeng Lithium Group Co Ltd (SHE: 002460).
Here's what is happening.
Image source: Getty Images
Core Lithium shares strengthen on Thursday
Core Lithium told investors today that it has paid US$2 million to terminate its final offtake agreement with Ganfeng early.
This will enable the company to sell future spodumene production to other project partners and other clients on the spot market.
Core Lithium said the move will enhance marketing flexibility and expand its strategic funding options, with the junior miner now free "to fully leverage the quality of our resource base and infrastructure" to find new partners, according to CEO Paul Brown.
The company said:
Together with the recently announced Restart Study and A$50 million placement and follow on share purchase plan, the removal of all offtake commitments optimally positions Finniss as a strategic, long-life, low-cost and high-quality lithium restart opportunity.
Capital raise finalised
Core Lithium has undertaken a $60 million capital raising to move its flagship Finniss Lithium Project in the Northern Territory toward a final investment decision (FID).
Core Lithium said the initial institutional placement, announced on 28 August, attracted high quality partners, including new investors.
The placement price was 10.5 cents per Core Lithium share.
A shareholder purchase plan (SPP) to raise an additional $10 million closed yesterday.
What will Core Lithium use the new funds for?
The miner said:
The equity raising will enable Core to accelerate the advancement of the Finniss Lithium Project towards a Final Investment Decision (FID) through expediting BP33 boxcut and decline development, operational readiness activities and strengthening Core's balance sheet to support the ongoing strategic funding process.
Brown added that some funds would be used to cover a portion of the operational readiness costs identified in the restart study for Finniss, which was released to investors in June.
The miner said the study repositioned Finniss as a "highly attractive, low-cost" underground mining operation with a 20-year life.
Core Lithium placed Finniss into care and maintenance last year due to tumbling lithium commodity prices.
Commodity values fell due to higher global production and cooling demand for lithium for electric vehicles.
Brown said the funds would allow the company to progress its underground development and accelerate operational readiness.
He said the company was working to finalise strategic funding solutions to meet its remaining capital needs.
Brown said:
We remain focused on delivering value for all shareholders as we progress Core's growth and development objectives.
Core Lithium will host its annual general meeting on 10 October.
