European Lithium has signed a binding term sheet with Obeikan Group to jointly develop and operate a lithium hydroxide processing plant in Saudi Arabia.

The 50:50 joint venture company will be geared towards developing, constructing and commissioning a lithium hydroxide processing plant, and operating the plant for the conversion of lithium spodumene concentrate from the Wolfsberg lithium project in Austria.

The JV company will have an exclusive right to purchase spodumene mined from the current resource at Wolfsberg, with European Lithium (ASX:EUR) to sell the lithium spodumene concentrate to the JV company at a reduced rate with a floor price of US$3,000/t and a ceiling price of US$7,000/t over the life of the current resource of the mine.

Plus, the facility is expected to be developed to meet the minimum initial capacity and product specifications based on the company’s binding long term supply agreement with BMW.

Significant boost to Wolfsberg project economics

European Lithium chairman Tony Sage said the new facility, once operational, is expected to significantly reduce energy costs and deliver savings in Opex, in addition to lower Capex, for operations at the Wolfsberg project.

“We are pleased to reach this strategic step in partnering with Obeikan that paves the way for significant Opex savings including greatly reduced energy and financing costs, and a much lower taxation rate,” he said.

Notably, the processing plant capital investment will be fully funded through the JV, with European Lithium’s equity contribution expected to be in-kind rather than a cash contribution.

To this end, the company will engage DRA Global (DRA) to update the existing DFS to reflect these potential savings and produce a new project NPV.

“We look forward to progressing our plans to harness the latest technology in developing a facility of the highest quality and efficiency, in doing so, strengthen the economics of Wolfsberg and our future projects,” Sage said.

Beneficial partnership for all stakeholders

The completion of the transaction is subject to verification from the Saudi Industrial Development Fund (SIDF), and Obeikan Investment Group CEO Abdallah Obeikan said he is confident the partnership will be beneficial for all stakeholders.

“This partnership will combine EUR expertise with the industrial knowledge of Obeikan and the strength of Saudi Arabia,” he said.

In the event the business combination agreement with Sizzle Acquisition Corp completes, European Lithium has agreed to procure the assignment of its rights and obligations under the JV Term Sheet to Critical Metals Corp (CRML) or one of its wholly owned subsidiaries, subject to approval by the CRML Board.

The NASDAQ listing of CRML is nearing completion, with final SEC approvals expected to be obtained by the end of June 2023.

Upon the closing of the transaction, EUR will be issued US$750 million worth of ordinary shares in CRML.




This article was developed in collaboration with European Lithium, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.