Argosy says Qingdoa seeks to terminate Rincon lithium offtake deal

PERTH (miningweekly.com) – ASX-listed Argosy Minerals will resist attempts by China’s Qingdoa Qianyun High-tech New Material Company to terminate an offtake agreement over the Rincon lithium project, in Argentina.

In August, the two companies executed an equity placement and preliminary offtake agreement worth A$26.4-million, which would have seen Qingdoa take a 19.9% stake in Argosy, as well as offtake from the Rincon project.

Argosy earlier this month terminated the earn-in agreement with the Chinese company, after Qingdoa failed to satisfy certain conditions precedent to the placement agreement, at the agreed-upon date.

The offtake agreement, under which Qingdoa paid $7.5-million for an agreed quantity of battery grade lithium carbonate equivalent product during the first year of production from Rincon, as well as a separate five-year long-term offtake agreement for 1 000 t/y of potential Stage 2 product, remained in place.

The Stage 2 development work will see production at Rincon expand from the pilot plant scale of between 100 t and 150 t of lithium carbonate, to 1 500 t/y of lithium carbonate.

However, the Chinese company has now requested that the offtake agreement should also be terminated.

Argosy told shareholders that the company maintained its position that until they were validly terminated or amended, the offtake agreements remained in effect, and were not conditional on the completion of the now-cancelled share placement.

The company added that the offtake agreements provided for dispute resolution and arbitration mechanisms to resolve disputes, which Argosy would consider, should the two companies be unable to reach an agreement.