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Traxys signs up for Lepidico's lithium

ASX-listed Lepidico, which claims to be the leader in global lithium mica processing, has hooked a big fish with a binding offtake deal with one of the world’s largest commodities traders.
Traxys signs up for Lepidico's lithium Traxys signs up for Lepidico's lithium Traxys signs up for Lepidico's lithium Traxys signs up for Lepidico's lithium Traxys signs up for Lepidico's lithium

Lepidico is focused on making money from mica

Haydn Black

The Carlyle Group-owned Traxys has signed a binding agreement to take 5000 tonnes per annum of lithium hydroxide, all of the planned production from Lepidico's phase one lithium chemicals plant in the United Arab Emirates, for a total 35,500t over seven years.
 
Managing director Joe Walsh said Traxys' commissions would be "competitive within the industry".
 
"The flexible agreement allows Lepidico to agree the sale of lithium chemicals from phase one with
independent third parties with Traxys administering the arrangement via back-to back contract," he said.
 
Traxys can also purchase the lithium hydroxide, assume all the risks, and on-sell the products to end users itself.
 
Contract revenues are expected to be in line with Lepidico's May 2020 definitive feasibility study that flagged a net cash after tax profit over the 12-year project life of A$555 million.
 
The agreement has other facets with the multinational trader will act as Lepidico's principal agent, providing sales marketing, logistics and trade finance services under a flexible agreement that will last for the seven years, with an option to extend. 
 
It will also be Lepidico's agent for 100% of the caesium sulphate solution expected to be produced from the plant, expected to be 400tpa, and potentially other chemicals produced.
 
Walsh said Lepidico was looking to establish relationships with battery and industrial customers with phase one, to help underpin its planned second phase. 
 
The processing plant, to be built within the Khalifa Industrial Zone in Abu Dhabi, will take ore from the 80%-owned Karibib deposit in Namibia, and will use the company's patented processes to produce a range of products, including lithium hydroxide, caesium/rubidium, sulphate of potash, silica and gypsum.
 
Collectively the by-products will account for 38% of total revenue.
 
Phase one is close to commencing construction, with Lycopodium awarded the engineering procurement and construction management contracts, and a front-end engineering and design contract for the Karibib concentrator close to being awarded. 
 
With Traxys on side, Lepidico can now finalise project finance for the US$139 million project with the US International Development Finance Corporation 
 
Site works at Karibib are scheduled to start in the March 2022 quarter. 
 
The plan is to commence mining in late 2022 and chemical production in 2023, commencing the feasibility on stage two at the same time.
 
The company started the quarter with almost A$12 million cash and no debt.