Tantalex Lithium Secures Glencore Partnership with Offtake Agreement and $5M Financing
Tantalex Lithium Resources Corp. (CSE: TTX – FSE: DW8 – OTCQB: TTLXF) announced yesterday November 13th the successful conclusion of a lithium marketing offtake agreement (Marketing Offtake Agreement) and a convertible facilities agreement amounting to US$5,000,000 (Convertible Facilities Agreement) with Glencore AG (Glencore). These agreements were previously disclosed in Tantalex’s news release on September 8th, 2023.
The Marketing Offtake Agreement encompasses 100% of the lithium production from Tantalex’s Manono Lithium Tailings Project, starting from the commencement of commercial production throughout the mine’s operational life.
Glencore will exclusively manage all sales and contribute one-third of the total capital expenditure for the Manono Lithium Tailings Project.
However, this contribution is contingent upon several factors, including Glencore’s satisfactory review of the feasibility study, full Capex funding through financial institutions or Tantalex-raised equity, and mutual agreement on the drawdown schedule with other lenders, among other customary conditions precedent.
Tantalex Lithium CEO, Eric Allard, expressed the significance of this milestone, stating, “This is again a significant milestone for us as we pursue our objective to de-risk the project and bring our Manono Lithium Tailings Project into production.”
The recent Preliminary Economic Assessment (PEA) outlined a US$147 million CAPEX for a 112,000 tpa SC6 production, and Glencore’s strategic support aims to solidify the remaining two-thirds of the capital expenditure costs.
Under the Convertible Facilities Agreement, Glencore will provide two convertible term loan facilities: Facility A, up to US $2,000,000, available at the Closing Date, and Facility B, up to US $3,000,000, subject to certain conditions precedent.
The Facilities will terminate on December 1st, 2025 (the Termination Date). Tantalex will pay Glencore a facility fee equal to 1.5% of the aggregate amount of the Facilities as of the Closing Date.
The Facilities are convertible at Glencore’s option, with the Conversion Price based on the higher of the closing price of Common Shares published by Bloomberg for the trading day before the Closing Date and the 20-day volume-weighted average trading price published by Bloomberg for the 20 trading days post-Closing Date, with a 25% discount.
Glencore’s conversion option during the Conversion Period allows for the subscription of Common Shares at the relevant Conversion Price.
The Convertible Facilities Agreement includes customary provisions such as events of default, representations, warranties, covenants, security-related clauses, and indemnities.
Each loan bears interest at a rate equal to 3-month CME Term SOFR plus a margin. Glencore’s option to convert amounts ensures flexibility while adhering to a cap of 20% of Common Shares held post-conversion.
The Convertible Facilities Agreement demonstrates a strategic alignment between Tantalex and Glencore, marking a significant step forward in advancing the Manono Lithium Tailings Project and strengthening their collaboration in the lithium sector.
