Core Lithium has signed a binding agreement with Tesla to supply lithium from its NT project

Tesla has agreed to a four year offtake deal with Core Lithium, and could also collaborate on downstream processing.

An aerial view shows cars parked at the Tesla factory in Fremont, California.

Core Lithium shares have spiked more than 13 per cent after the company struck an offtake deal with Tesla, and flagged a potential collaboration on downstream processing.

Core, which is developing the Finniss Lithium Project in the Northern Territory, said Tesla had signed a binding term sheet to buy up to 110,000 tonnes of lithium spodumene concentrate over four years, starting before mid-2023.

Tesla will also examine the possibility of supporting the potential phase three development at the Finniss project, which involves processing the concentrate.

Core made a final investment decision to develop the Finniss project near Darwin in September last year.

The project is fully-funded and is currently under construction, with the first lithium concentrate production scheduled for the fourth quarter of this year.

Almost 100 per cent of the anticipated stage one production is now spoken for under offtake agreements.

Core said the term sheet with Tesla was subject to a definitive purchase agreement being signed by August 27, with lithium supply to then start before July 31, 2023.

“Core Lithium is thrilled to have reached this agreement with Tesla and look forward to further growing this relationship in the years to come,’’ Core managing director Stephen Biggins said.

“Tesla is a world leader in electric vehicles and its investment in offtake and interest in our expansion plans for downstream processing are very encouraging.”

Core said the third phase of the project’s development, which is not part of the currently funded-project, includes a processing plant to further refine the concentrate.

“Tesla has agreed, subject to execution of a definitive agreement, to provide additional support to Core to assist with the successful completion of its stage three expansion and the incorporation of Core’s lithium chemical product into Tesla’s supply chain,’’ the company told the Australian Securities Exchange.

Core announced late last week that it had acquired six new mineral leases adjacent to the Finniss project for $5m in cash.

Core last year carried out an underwritten $91m placement, a $15m share purchase plan for existing shareholders, and a $34m equity investment from China’s Ganfeng Lithium which put it in a financial position to pull the trigger on Finniss.

Shenzhen-listed Ganfeng also agreed at the time to buy 75,000 tonnes per year of concentrate from the Finniss project over four years.

The $89m Finniss project is just 88km from the Darwin port and has a five year mine life producing up to 197,000 tonnes of concentrate per year. A stage two expansion could extend the mine life to 10 years.

By midmorning Core shares were 10.9 per cent higher at 91.5c, after hitting 94c in early trade. The stock was trading at 22c this time last year.

Originally published as Core Lithium has signed a binding agreement with Tesla to supply lithium from its NT project