WH Ireland Analyst Paul Smith said this morning “REM announce that the Sonoran Lithium Project Partners (REM and its partner Bacanora Minerals. AIM:BCN, NA) have signed a conditional supply agreement with Tesla to supply lithium compounds its Giga factory in Nevada.
The Partners are developing their Lithium project in Sonora Mexico which they anticipate will have a capacity of 35kt/a lithium compounds (carbonate and hydroxide) and be scalable to 50kt/a. Tesla will take a proportion of expected production of lithium hydroxide (if quality can be established) for an agreed price based on cost of production. The contract is for 5-years and extendable for a further 5-years after that.
We think this is great news for the Sonora Partners and links in with our idea that the Tesla Gig factory will need a variety of suppliers and that Sonora Lithium could fit into the mix. The contract is obviously dependent upon certain milestones of development (feasibility and funding etc.) and lithium compound quality, but these are within the partners own control to a certain extent. Tesla has also an option to participate in any funding or capital raising and we would see their presence on these transactions as a vote of confidence in the project.”
