The Liontown Resources Limited (ASX: LTR) share price has gone up 5% on news on a deal with Ford Motor Company (NYSE: F).
Liontown is an ASX lithium share that owns 100% of the Kathleen Valley lithium project.
Liontown’s agreement with Ford
The ASX lithium said that it has secured its third foundational offtake agreement with leading global automaker Ford, together with a debt facility for the Kathleen Valley project.
Ford and Liontown have executed a ‘definitive binding full-form offtake agreement. This is the final offtake agreement required to underpin development of the Kathleen Valley project.
The offtake agreement is for the supply of up to 150,000 dry metric tonnes (dmt) per annum. It’s an initial term of five years from the start of commercial production (expected in 2024). This could help helpful for the Liontown share price in the long run.
Ford and Liontown have also executed a binding full-form funding facility agreement for a A$300 million debt facility to be used for the project’s development.
Liontown outlined that, together with the proceeds from the company’s $463 million capital raising in December 2021, this paves the way for a final investment decision for the project.
The other agreements that the ASX lithium share has already signed is with Tesla and LG Energy Solution.
Liontown’s total offtake commitments now stand at up to 450,000 dmt per annum of spodumene concentrate, representing approximately 90% of its start-up production capacity.
Management comments
The Liontown Managing Director and CEO Tony Ottaviano said the agreement was “momentous”. Mr Ottaviano said:
Our disciplined approach to our offtake strategy has enabled us to build a customer base of Tier-1, globally significant customers in the electronic vehicle battery supply chain, validating Kathleen Valley’s status as a globally relevant lithium asset.
Final thoughts on the Liontown share price
The ASX lithium miner has done all of the right things to set up with quality customers, and also get the funding it needs. As lithium demand is expected to rise for years to come, it seems like Liontown has a compelling future. After a 35% decline since the start of the year, I think it could be worthwhile jumping on it for the long-term.
